DAILY PRICE LIST FOR MUTUAL FUNDS, REITS and ETFS

0

Download: DAILY PRICE LIST FOR MUTUAL FUNDS, REITS and ETFS

‘Retention of MPR to Further Boost   Fixed Income Market’
Investment analysts have said the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to hold monetary policy rate (MPR) at 14 per cent will retain investors in the fixed income securities market.
The equities market has seen the migration of many investors to the fixed income market, who see that segment of the market to be relatively safer. There have been calls for a reduction in the MPR to stimulate more borrowings and make equities investments attractive.
However, the MPC on Tuesday decided to hold on to the current rate. Commenting on the development, analysts at Cordros Capital Limited said: “Given the MPC’s decision to hold on to the policy rate at the current level, we expect the current yield environment to prevail in the near term. Also, we anticipate continued investor preference for fixed income instruments relative to equity investments given the risk and return potentials of both markets.”
According to them, yields levels to remain unchanged in the fixed income space, adding they  do not expect a significant deviation from status quo.
“We note that the average treasury-bills (T-bills) yield (18.92 per cent) still stands above the inflation rate (18.3 per cent), ensuring some real return for investors, albeit minimal. Furthermore, average yields across all instruments have increased marginally since the last MPC meeting, from an average of 18.59 per cent and 15.90 per cent to 18.92 per cent and 16.92 per cent in bonds and T-bills accordingly. In this manner, we foresee average yield hovering around the present levels in the near term,” they said.
The analysts added that the   decision to also hold Cash reserve ratio (CRR) and liquidity ratio implies that banks’ circumstances pre-MPC remains.
“Given the high yield environment and the maintenance of the current MPR, we expect that banks will continue boosting their interest income through investments in fixed income securities,” they said.
Cordros Capital noted that maintaining the MPR at 14 per cent may not augur well for the real sector considering that manufacturing companies have grappled with the high interest rate environment for some time now.
“Although a cut in rates should ordinarily favour the real sector, the unwillingness of commercial banks to lend to companies in the sector negates the intended impact of an expansionary monetary policy. We maintain that a recovery from the current economic downturn will largely stem from successful fiscal stimulation as the contractionary policy of the CBN will not do much for the real sector. However, in the event that the MPC’s objective of price stability buoys up foreign capital flows and subsequently boosts forex (fx)liquidity, the real sector will benefit from a more liquid and stable FX market,” the analysts.