Listed stocks in Nigeria, Africa’s largest economy’s bourse are seen routing a three-year low with Year-to-Date (YTD) negative return in excess of minus 20.4 percent, despite Thursday’s choppy buy at Customs Street.
Nigeria’s retail investors have remained on the sideline at the Lagos bourse, playing a wait and see game, while foreign institutional buyers reduced their bets in show of their feelings over the country’s FX policies.
“Note the collapse in Nigerian interest rates at present – with short-rates down to around 3-5% – is something we would expect to add to weakening naira pressure. We accept that today there is no immediate sign of the Nigerian authorities being prepared to accept the need for a weaker currency – so we should assume continued declines in per capita GDP.
“The statistics office released data showing that Nigerian unemployment jumped from 8.2% in 2Q15 to 9.9% in 3Q15 – due in part to massive 2million (2.5%) rise QoQ in the labour force. The working age population is rising faster than GDP,” said Charles Robertson, chief economist at Mosco-based Rencap.
Despite attractive valuations, which portend good re-entry spot for value hunters, investor sell-offs continue to dominate equities.
Market analysts said third-quarter (Q3) 2015 GDP which came in at a disappointing 2.8% and unclear near-term growth prospects of Nigeria, with over 50percent decline in oil price is driving a wait-and-see investor approach at the Nigerian Stock Exchange (NSE), with play now tilting more towards the less risky FI market.
The NSE All Share Index (ASI) trades at its lowest level since October 2012, said market watchers at Lagos-based Dunn Loren Merrifield.
“This, in our opinion suggests that the key market players remain unconvinced about the strength of the domestic macro-fundamentals at this time”, said analysts at Lagos-based United Capital plc.
“The equities market continues to defy all fundamental and technical justifications for an imminent reversal in the short term, as sentiment remains weak with offshore investors staying on the sidelines.
“This trend will likely persist in coming sessions, though at a softer pace. Bearing this mind, we recommend cautious investing with medium to long term approach”, United Capital analysts added.
The Nigerian Stock Exchange All Share Index (ASI) increased yesterday by 0.99%, while the Year-to-Date return stood at -20.48%.
The All Share Index closed at 27,559.18 points as against the preceding trading day close of 27,287.89 points, while Market Capitalisation closed at N9.475 trillion against preceding day close of N9.382 trillion.
Iheanyi Nwachukwu
