The Nigerian financial market has recorded a major shift as the Federal Government and companies pull back from bonds segment of the market while equities market record a major rebound.
The value of government securities listed on the Nigerian Exchange Limited, NGX, in the first quarter of the year, Q1’22, declined by 73.6 per cent to N599.7 billion from N2.27 trillion recorded in the corresponding period of 2021, Q1’21.
Also the value of corporate bonds listings declined by 32.4 per cent to N28.3 billion from N41.9 billion in Q2’21.
Consequently, the total value of newly listed securities (Government securities, equities and corporate bonds) on the Exchange in the period under review fell by 33.3 per cent to N1.8 trillion from N2.7 trillion in Q1’21.
Meanwhile, equities listed on the NGX in Q1’22 recorded astronomical growth, rising 1,901.8 per cent to N1.1trillion from N54.9 billion in Q1’21.
FG Borrowing From Bonds Market Declines 73.6% To N600bn
The monumental surge in equities listings amidst the huge decline in government securities also indicates a fiscal policy crowding-in, reversing a five-year trend of crowding-out in the public-private sector interplay in the Nigerian capital market.
The crowding-out effect comes when huge fund raisings by governments in the capital market through bonds issues ultimately squeezes private sector fund raisings in the same market. The opposite referred to as crowding-in has now been recorded.