News - Africa news .The Nigerian capital market, which experienced major dow nturns as a result of the global meltdown last year, is on the path of full recovery with major indicators rising.
The All Share-Index increased from 20,827.17 points at the end of December last year to 25,554.35 points as at June this year, representing some 20.70% increase, the Monetary Policy Committee (MPC) of the Central bank of Nigeria (CBN) indicated in a communique at the end of its meeting in Abuja, the Nigerian federal capital city.
"The Nigerian capital market is still showing some signs of recovery. The All-Sh are Index (ASI) has increased and Market capitalization (MC) - equities only, increased by 24.9 per cent from 4.98 trillion naira to 6.28 trillion naira over the same period," the communique said.
MPC also observed that the number of deals, volume and value of shares traded in creased by 16.34, 19.23 and 100.00 per cent respectively, attributing the increase in All Share Index and Market Capitalization principally to share price increases in the Banking, Food and Beverage and Oil/Gas sectors.
The Committee welcomed the continuing improvement in the stock market, noting the potentials for further recovery given the passage of the harmonized Asset Management Corporation of Nigeria (AMCON) Bill by both chambers of the National Assembly. The bill is awaiting the accent of the President before it becomes operational.
The MPC which met on Monday to review domestic economic conditions during the first half of 2010 and the challenges facing the Nigerian Economy against the backdrop of developments in t he international economic and Financial environments also noted that the foreign exchange market remained relatively stable during the period under review.
According to the communique, the Gross external reserves stood at US$ 37.63 billion on 23rd June, 2010 representing a decrease of US$ 1.19 billion or 3.06 per cent when compared with the level of US$ 38.82 billion as at 31st May 2010.
The Committee, however, noted that the current external reserves level was still adequate as it would finance 16 months of import, compared to the internationally-recommended benchmark of three months of import cover for a country's external reserves.
Against the backdrop of the foregoing, the MPC noted with satisfaction the continued macro-economic stability. It, however, stressed the need to grow the real sector on a sustainable basis.
It also reiterated the possible inflation risks, in the light of the anticipated budget deficit and the operationalization of the proposed Asset Management Corporation. However, monetary aggregates are still underperforming and the Asset Management Corporation is yet to take off.
The communique also observed that financial markets, though still fragile, had recovered faster than expected, urging greater efforts in accelerating reforms in the other sectors of the economy.
On the global scene, the Committee noted that market anxiety over the fiscal positions of several European countries was posing new challenges for the world economy even as Global Economic recovery remained fragile.
If this were to happen, there may be an impact on global commodity prices, including prices of oil, with knock-on effects on the government's fiscal position and the foreign sector," the communique said.
However, recovery remained robust in most developing and developed countries, wi th the exception of high-income European countries where it stagnated. In this regard, the Committee commended the recent commitment of the G-20 Summit in Toronto, Canada, which agreed to safeguard and strengthen the recovery process to lay the foundation for strong, sustainable and balanced growth, as well as strengthen the financial systems against risks.
Source: Pana Lagos |