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Economy | Budget and Plans

Budget 2023: Nigeria’s Bond and Fixed Income Market to Witness Increased Activities

Oct 20, 2022   •   by Ottoabasi Abasiekong   •   Source: WebTV   •   eye-icon 679 views

The N20.51trn 2023 Federal Government of Nigeria Budget presented to the joint session of the National Assembly recently will lead to increased activities in the Bond and Fixed income market. Professor Uche Uwaleke, the President of the Association of Capital Market Academics of Nigeria, ACMAN, made this point while speaking on “Budget 2023: Implications for the Nigerian Capital Market”. 

 

According to him, the budget will lead to a significant shift in activities, from equities to the bond market, while the negative sentiments will depress stock prices. He noted that the equities market performance may be bearish in 2023 if the Central Bank continues to tighten monetary policy to rein down inflation in the country. 

 

He cited the recent year-to-date performance of the equities market of about 11.5%, which showed a negative return on investment due to rising headline inflation, which is currently 20.77%. The scholar believed the fixed-income market would gain traction and be the greatest beneficiary because of the rise in interest rates and improvement in bond yields.

 

“Essentially, the equities market will be affected, and if you notice the trend, since June 2022, the performance has been in the bearish zone, and this could continue till the end of the year”, Prof. Uwaleke noted. 

 

He argued that the provision of subsidy for the 2023 budget could widen the deficit because of the uncertainty of the next administration fully implementing its removal from June. This, he added, will have implications for the capital market

 

He also referred to the global trend where the U.S Fed, Bank of England and ECB have been raising interest rates. He said this development would lead to more capital outflows, including foreign portfolio investments.

 

The President of ACMAN advocated privatizing state-owned enterprises through the capital market, bringing more transparency, governance, accountability and wealth creation to Nigeria.

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