NAN-HE-5
Budget
By Chinyere Joel-Nwokeoma
Lagos, July 5, 2017 (NAN) Some financial experts have urged the Federal Government to ensure speedy implementation of the 2017 budget and reduction in interest rate to sustain stock market growth in the second half of the year.
They gave the advice in separate interviews with the News Agency of Nigeria (NAN) in Lagos on Wednesday, while reacting to stock market expectations in this second half of the year.
According to them, the stock market performance can only be sustained with effective implementation of the capital component of the 2017 budget and friendly economic policies.
Prof. Sheriffadeen Tella, Professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, said that the stock market would grow if interest rate crashes.
Tella said that further drop in inflation rate and listing of more blue chip companies like telecommunications would boost stock market growth and development.
“The market will not grow if short term interest rate remains high, inflation high, recession persists; although we are exiting that gradually, and if international economies slump, they affect our exports.’’
Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University, Keffi urged government to guard against avoidable delay in the implementation of the 2017 budget, especially the capital expenditure component.
Uwaleke said that the Central Bank of Nigeria (CBN) should begin to consider loosening of the monetary policy to sustain economic recovery and growth.
He stated that with continuous recovery of the economy and gradual return of confidence on the part of both foreign and local investors, the market fortunes in the second half would likely outperform the first half.
Uwaleke said that stock market performance in the first half of the year was largely influenced by macro economic performance.
He noted that the optimism was hinged on the high likelihood that the economy would be out of recession latest by the third quarter, and improved access to foreign exchange.
Uwaleke added that retreated headline inflation, improvements in the ease of doing business and positive half year financial results of listed companies would boost market performance.
He, however, expressed fears that severe economic shock, either from crude oil price or output, may affect the market.
NAN reports that the NSE All-Share Index in the first half rose by 6,242.86 points or 23.23 per cent, to close at 33,117.48, from the opening figure of 26,874.62.
The market capitalisation closed higher at N11.45 trillion, from the opening figure of N9.25 trillion, indicating a growth of 24.04 per cent.
The growth in market indices was due to positive sentiments with increased investor confidence, in spite of the unstable sociopolitical business environment and crude oil price.
NAN also reports that a total of 43.13 billion shares were traded by investors during the first half of the year, as against 40.29 billion transacted in the corresponding period. (NAN)
JNC/FLP/EEE
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Edited by Folorunso Poroye/Ese E. Ekama