By Udeme Ekwere

Thursday, 6 Jan 2011

Investors rekindled interest in stocks quoted on the Nigeria Stock Exchange on Wednesday, as increased activities in equities were recorded.

At the close of trading on Wednesday, the equity market recorded impressive gains as the key benchmark indices recorded significant growth.

This, according to market analysts was due to active bargains, as the bulls dictated the market tempo, with all major market indicators closing with significant gains.

Specifically, the NSE‘s All-Share Index closed at 25,981.58 points, closing above its six-month high, with a rise of 878.65 basis points or 3.5 per cent compared to 25,102.93 recorded on Tuesday‘s close.

The index had increased by 1.34 per cent at the close of activities on the first trading day of the year.

In a similar development, the market capitalisation of the listed equities rose by N281tn or 3.5 per cent from N8.020tn recorded on Tuesday, to close at N8.301tn.

This was attributed by analysts, to the renewed interest of investors due to the purchase of the toxic assets of banks by the Asset Management Corporation of Nigeria.

The Managing Director, Ideal Securities and Investment Limited, Mr. George Okafor, said that it was only natural for investors to react positively to the news of the purchase of the toxic assets.

According to him, activities in the market were largely information driven, and investors were bound to have an increased level of confidence at this time in the market.

He said, ”I think there is a lot of anticipation on the part of investors on the back of the fact that AMCON has come into the market to buy off the toxic assets of banks. However, it is important to note that the large volume of appreciation recorded today, might just be a band-wagon effect, where some investors are just buying because others are buying.

”So, it may be best to observe trading activities for the next few days before we can be certain if this huge trend will be sustained.”

The AMCON had on Friday completed the process of purchasing the non-performing loans of 21 out of the 24 Deposit Money Banks in the country.

The, corporation, issued N1.04tn zero coupon initial consideration bonds due in 2013, at its meeting in Lagos.

It said, ”AMCON has concluded arrangements to issue initial consideration bonds to the eligible financial institutions in consideration for AMCON‘s acquisition of the eligible bank assets from eligible financial institutions by acquiring almost all non-performing loans in the intervened banks and margin-related NPLs from the non-intervened banks.”

The Chairman, AMCON, Alhaji Aliyu Belgore, said the transactions had the full guarantee of the Federal Government and the full support of both the executive and the legislative arms of government.

Source: Punch