Investors switch to T-Bills as stock market crashes losing N1.8trn

The lure in the Treasury Bills (T-Bills)’s return on investment has swayed investors’ attraction from the capital market, thereby triggering sell- offs in equities. The result is a N1.8 trillion loss in the capital market.

The domestic bourse booked its first w/w loss in 2024 as value erosion in major bellwethers – MTNN (-5.2 per cent), BUACEMENT (-10.0 per cent), and GTCO (-3.2 per cent) – pulled the NGX-ASI down by 2.5 per cent werk-on-werk (w/w) to 101,858.37 points. Consequently, market capitalisation shed N1.8 tillion to N55.7 trillion while Year-to-Date (YTD) return declined to 36.2 per cent (previously: 39.6 per cent).

Analysts believe the 364-day treasury bills stop rates spiked to 19 per cent per annum, the first clear signal that the central bank was moving towards a hawkish monetary policy. The 182-day and 91-day bills also rose to 18 per cent and 12.2 per cent, is helping investors take new stands on whether to invest in the capital market of money market.

The rate hike is seen as a major monetary policy move aimed at fighting the depreciation of the naira and sucking out the excess money supply to combat galloping inflation.

At the last auction on the 29th of January, the interest rates for these maturities were recorded at 5% for the 91-day bills, 7.15% for the 182-day bills, and 11.54 per cent for the 364-day bills, respectively.

A total of N1 trillion was on offer but was oversubscribed as investors staked a whopping N2.3 trillion. The one-year bill on offer for N600 billion recorded a massive N1.8 trillion subscription out of which the central bank sold N908.7 billion

Last week, activity level decreased as average volume and value traded fell 36.6% and 49.9% w/w to 321.9 million units and N7.4 billion respectively. Top traded stocks by volume were FBNH (399.4m units), TRANSCORP (150.1 million units), and JAIZBANK (136.7 million units), while FBNH (N10.6 billion), GTCO (N3.6 billion), and UBA (N2.8 billion) led in terms of value…

UNI Agric Markurdi
Blueprint Whatsapp