Nigeria's market shrugs off recession news

Nigeria's stock market showed resilience as it shrugged off weak economic data indicating a technical recession. The NSE All Share Index closed higher for the second consecutive session this week, with investors seemingly unfazed by the negative news. Financial Markets Analyst, Andrew Tsaku from Kapital Care Trust & Securities, discussed the market's reaction to the economic numbers. Despite high inflation at 17.1% and the confirmation of a recession, the market exhibited a mixed response. Tsaku mentioned that the market had not fully factored in the impact of the released statistics, but trading remained close to positive due to the performance of bellwether stocks. Some stocks like Tullale Cepplatz and Pre-Skool saw gains of over 9%, with others like Guaranteed Trust Bank also making notable gains. However, overall trading in the market has been largely sideways, reflecting persistent concerns. Liquidity has remained low in the stock market as foreign investors have been on the sidelines. Tsaku noted a recent surge in activity in the bond market, with $270 million invested in fixed income markets. Despite this, he expressed doubts about a similar influx of funds into the equity markets in the near future. The attractive returns in the fixed income market have drawn investors wary of poor reports in various sectors. Tsaku suggested that most investors would likely stay cautious and remain on the sidelines, except for those with a long-term investment view. When asked about the market's response to the current data covering all possible outcomes, Tsaku emphasized that the market had been at low levels, lacking momentum in terms of volume and value. He highlighted the impact of foreign investors remaining cautious and the market's previous substantial losses, which have slightly improved but remain below peak levels. Tsaku concluded that without a significant stimulus, the equity market is unlikely to return to positive territory for the rest of the year. Despite the challenges, the resilience of Nigeria's market players and the potential for future growth remain central themes amid economic uncertainties.