Investors are now contending with recent sharp sell-off in equities and a possible rebound which could be aided by impressive third-quarter (Q3) results release by listed companies.
But the message remains that investors should not see the current market dip as a reason to sell quality investments, rather they should leverage the opportunity which present decline offers investors with long-term goals to purchase additional investments at attractive prices.
With investors eyes on Q3 financials, analysts expect release of weaker-than-expected results to weigh on stock buyers appetite.
Recall that Nigerian equities lost about N114billion last week and about about N984billion year-to-date as equity investors remained cautious at the local bourse as exchange rate uncertainty and macroeconomic issues hurt their investments.
Equity market in review
Last week, the Nigerian Stock Exchange (NSE) benchmark indicator – the All-Share Index (ASI) depreciated by 1.10percent to close on Friday at 29,834.21 points as against 30,165.22 pointing at the beginning of trade last week.
The market capitalisation which stood at N10.367 trillion at the beginning of last week declined to N10.253trillion as sell pressure weighed on stocks pricing. The Year-to-Date (ytd) return of Nigerian equities stood at -13.92percent.
Twenty-nine (29) equities appreciated in price in the review week, higher than twenty-three (23) equities in the preceding week. Thirty-nine (39) equities depreciated in price, lower than forty-eight (48) equities in the preceding week, while one hundred and twenty-two (122) equities remained unchanged, higher than one hundred and nineteen (119) equities recorded in the preceding trading week.
Analysts outlook
“Whilst our bearish view on oil, and the fact it perhaps remains the single most important factor, means there remains a major risk overhang over the NSEASI, and the banks in particular, we see long-term value at current prices either for long-term or trading positions,” research analysts at ARM said in their Nigerian Capital Market Strategy for H2-2015.
Reserach analysts at Lagos-based investment banking group, Dunn Loren Merrifield said in their recent investment note that, “the market may continue in the bearish territory this barring any change in the prevailing fundamentals.”
They noted: “The performance of the equity market for last week was a mixed-bag, even as domestic equities recorded a slow week considering that macro issues remain ever so pertinent on investment decisions.”
Analysts at Lagos-based investment house, United Capital plc said “the weak sentiment in the market will persist this week.”
According to the analysts, “taking a cue from last week, we think Q3 numbers will be the major driver for the market this week much more than economic or political news flow. On this note, we expect the bearish sentiment to linger, though impressive numbers may trigger bargain hunting in equities”.
In a related view, research analysts at Financial Derivatives Company said “Poor Q3 results may weigh on the markets and wipe out gains.” “JP Morgan index delisting implementation will hurt equities in October” the analysts said in the monthly economic news and views presented at Lagos Business School.
Iheanyi Nwachukwu
