Stocks value rise on high inflation rate
Inflation rate has risen above the high point of the Central Bank of Nigeria/Monetary Policy Committee ((CBN/MPC) range of between 6 per cent and 9 per cent year-on-year for four months, with bullish implications, stockbrokers told the Daily Trust, for stocks.
The stockbrokers submitted this development is driving the stock market and influencing investors to divert their resources to the capital market.
According to the National Bureau of Statistics (NBS) Consumer Price Index and Inflation Report for September 2015, inflation increased marginally to 9.4 per cent (year on year), from 9.3 per cent in August.
The NBC attributed the faster pace of stock activities in September to business in higher food and nonfood divisions ranging from alcoholic beverage, tobacco and kola, clothing & footwear, to housing, water, electricity, gas and other fuels divisions, which it said contributed to the headline index. “The Muslim holiday period may have contributed to higher food prices,” it believed.
The food sub-index as a whole recorded a marginal increase by 10.2 per cent (yearon-year) in September from 10.1 per cent in August. Prices rose in major categories as bread and cereals, meat, fish, and oils & fats groups. The fruit, vegetables, potatoes, yams and other tubers groups have, however, held constant or grown at a slower pace for three consecutive months, ultimately weighing on the index.
Some stockbrokers believed that the increase in inflation rate is responsible for the sudden rise in stocks value, which started last Thursday with N190 billion gains in the last three trading days.
Stocks had on Thursday appreciated by N11b, surged by N46bn on Friday and rose by N133bn yesterday.
When trading closed on Monday, activity as measured by volume and value traded closed with 104.466m shares valued at N1.935bn transacted in 2,930 deals.
The financial services sector continues to dominate volume and value, driven by transactions in Zenith Bank Plc, which traded 16.680m shares worth N293.742m, followed by FBN Holdings Plc with 14.158m units of shares valued at N82.439m, UBA Plc with 6.099m shares at N26.014m and Guaranty Trust Bank Plc with 5.880m shares worth N139.579m.
Top on the gainers log was Dangote Cement Plc with a gain of N7.94 kobo to close at N168.95 kobo, followed by Mobil Nigeria Plc with N6.00 kobo to close at N154.00 kobo from N148.00 kobo it opened the week, UAC of Nigeria Plc with N0.80 gain to close at N28.85 from N28.050 and Lafarge Africa Plc with N0.65 to close at N99.50.