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The Nigerian Equities Market Achieves a New High: The Nigerian Exchange Limited (NGX) concluded the first half of the year on a positive note, with the NGX All-Share Index reaching its highest level in 15 years at 60,968.27 points. Despite concerns, investor confidence remained strong, driven by positive sentiments surrounding the peaceful transition of power and favorable policies introduced by President Bola Tinubu’s administration.

The stock market witnessed a rally, breaking a four-year streak of losses in June and recording the best monthly performance in over two years. The market’s performance was influenced by factors such as increased demand for long-term instruments, changes in the foreign exchange framework, and the suspension of the Central Bank Governor. The equities market gained 18.9% in the first half of the year, with market capitalization also experiencing significant growth. The influx of local investors and favorable policies contributed to market stability and increased capital gains. The market’s positive trajectory is expected to continue during the earning season, driven by investors’ anticipation of attractive dividends and a promising yield environment.

Renewed Emphasis on Nigeria’s Electricity Sector: The World Bank has approved a $750 million loan to strengthen Nigeria’s power sector under President Bola Tinubu’s administration. This funding aims to address challenges in the electricity infrastructure and improve access to reliable electricity. The International Bank for Reconstruction and Development (IBRD) will provide $449 million, while the International Development Association (IDA) will contribute $301 million towards the newly approved additional financing. However, analysts recognize that Nigeria’s electricity deficits require a five-fold increase in annual investment to reach the desired power supply by 2030. The Nigeria Electrification Project, supported by the World Bank, focuses on solar power as a viable alternative. While solar and gas are reliable options, the cost of solar energy still reflects Nigeria’s reliance on imported panels. Nigeria is in the early stages of solar power adoption, primarily focusing on installation and fabrication processes.

Foreign Exchange Market: During the course of this week, there was a slight appreciation of the Naira by 12 basis points, bringing its value to N769.25 against the US Dollar at the I&E FX window.

Treasury Bills and Bond Market: Throughout the three trading sessions of the week, the Nigerian T-bills market witnessed subdued interest. This subdued activity resulted in a marginal decline of 16 basis points in the average yield, settling at 6.21% compared to the previous week’s rate of 6.22%. During the Primary Market Auction (PMA), the Debt Management Office (DMO) made a substantial offering of N187.12 billion, attracting a total subscription of N753.47 billion. The stop rates for the 91-day, 182-day, and 364-day papers were recorded at 2.87%, 4.27%, and 6.23% respectively. These rates indicated a decrease of 2.02%, 0.75%, and 2.01% from the levels observed in the previous auction.

This week witnessed a notable strengthening of demand in the FGN bond market, with investors showing increased interest across all tenors. The growing appetite for long-term instruments has intensified, leading to heightened competitiveness in bond prices. As a result, the average benchmark yield experienced a significant decline of 5.19%, settling at a favorable rate of 13.16% for the week.

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