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In continuing its bullish run, the NSE’s all-share index crossed the 40,000 points mark on Thursday, the last day of the year—up more than 45% from a low of 26,845 at the start of the year. It’s the biggest growth margin recorded by any of the world’s stock exchanges. The NSE’s performance in 2020 is also the best it’s managed in seven years. Its market capitalization now stands at over ₦20 trillion. Analysts say the bourse’s strong showing may be credited to the comparatively weak yields seen in the country’s fixed income market. Investors have become more attracted to the riskier equities space in the wake of the falling gains from bonds.
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The Central Bank’s monetary policy has played a part. Its restriction on Open Market Operations (OMO) has led to excess liquidity, stoking interest in domestic equities. The apex bank’s action of cutting the Monetary Policy Rate (MPR) by 200 points to 11.5% has also encouraged parties with significant holdings to seek investment opportunities, especially in the country’s stock exchange. Some of the top-performing stocks over the period in consideration include Airtel, MTN, Dangote Cement, Mobil, and Zenith Bank. Closer to the present time, Dangote’s share buyback program has boosted positive sentiments in the market. Experts have suggested that the NSE will continue to outperform the Nigerian fixed income market, as they expect current economic conditions and financial policy to persist in the near future. Featured Image Source: Nairametrics
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