Jan 18 (Lagos) - The stock market continued its bull march to close near the 92,000 mark for the first time today. The stocks that made the move possible were
TRANSCORP ,
BUACEMENT &
DANGSUGAR while banking stocks witnessed some selling today with
GTCO &
ZENITHBANK both lower on high volumes.
Earlier this week, the economic data pointed to the usual pessimistic state of the economy when inflation numbers showed that there was no sign of a reversal anywhere in sight. Inflation will hit 30% soon and in the real economy it is probably much higher than that especially in food items.
This was to be expected because the CBN suddenly abandoned its intent to raise interest rates by offering much lower yields in the Treasury bills market and cancelling the Monetary Policy meetings that were supposed to hold in the fourth quarter of 2023.
Inflation and currency values are directly tied to interest rates so unless those are handled carefully, we cannot expect a turnaround. CBN on its part is also coming out of a lot of problems so it will take them time to sort themselves out. Recently it was announced that some departments of the CBN will be moved to Lagos from Abuja, perhaps that will make them more efficient.
Other news that came out was that cash scarcity had not improved at all and people still have to buy Naira from POS agents. We are talking about the Naira here, people have to buy Naira. This is something that will affect CBN's image and credibility so we can expect something to come out of the investigation they said that was being done in December 2023.
Third bad news was that Naira has hit a record low against the USD in the so called parallel markets. This is probably the most worrisome news and again is directly tied to interest rates and also Dollar supply. One noteworthy analyst did announce that Naira was undervalued in the parallel markets by almost 40% and we hope his words come out true.
The fourth bad news was that insecurity had increased in the country rather than reduced. There was an explosion in a City very close to Lagos while reports of rampant kidnappings and killings have been coming out of different parts of the Country.
The stock market bulls have been dealing with such stories for a long time now and have probably reached a point where they have become immune to bad news. So the stock market kept pulling higher and higher no matter what the statistics are showing.
The stock market is a bell weather for future growth and those expectations seem to be taking it higher. Sometimes ignorance is bliss and that seems to be the situation currently for the stock market bulls. However someone once said if Ignorance is bliss, then by are people not happy? that was the great President Jefferson.
That is something to think about.
We leave you with another quote on the topic, this time from Martin Luther King Jr whose Birthdate was yesterday so we wish a good MLK Day, week and month.
reporting for easykobo.com on Thursday, January 18 2023 from Lagos, Nigeria