Dr. Bamidele Alakija, B.A., M.Fin | The Cost of Money Is Still the Main Filter

A rising market can improve confidence, but it should not end the risk review.

Nigeria’s equity market closed Thursday on a firmer note. The NGX All-Share Index rose 0.62% to 243,958.73, with positive market breadth. That matters because broad participation is usually healthier than a narrow rally.

Still, the most important question for the weekend is not only whether the index rose.

It is whether the cost of money still allows companies, households and portfolios to remain resilient.

The Central Bank of Nigeria’s latest MPC decision kept the Monetary Policy Rate at 26.5%. Recent treasury-bill stop rates also remain meaningful: 91-day bills around 16.28%, 182-day bills around 16.50%, and 364-day bills around 17.34%.

These figures do not tell investors what to buy. They tell us that capital still has a price.

When the price of money is high, weak balance sheets become more exposed. Companies with poor cash flow face a harder test. Investors also need to ask whether a return is attractive after inflation, fees, taxes and liquidity constraints.

The global picture reinforces the same lesson. Brent crude traded near $76.49 as Middle East supply risks kept an oil premium in the market, while U.S. yields remained in the mid-4% area.

For Nigeria, oil, rates and currency cannot be separated.

Oil affects export revenue, inflation expectations and business costs. U.S. yields affect global capital preferences. Dollar strength affects imported costs and foreign-currency obligations.

This is why my Friday risk map has four questions.

Is market strength broad enough to support confidence?

Can company earnings justify higher valuations under expensive financing?

Is the portfolio return being measured after inflation and costs?

Does the investor have enough liquidity if conditions change?

A strong index is useful information.

But it is not a complete investment framework.

The disciplined investor studies what is rising, why it is rising, and whether the financial structure underneath can survive a less favourable outcome.

That is why the cost of money remains the main filter.

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Disclaimer: This article is for educational and informational purposes only. It is not personalised investment advice or a recommendation to buy or sell any financial asset.