The recent spates of risk shave by stock investors which fuelled the supply side at the Nigerian bourse has further impacted negatively on equities market which had last week yielded negative of 15.77percent in returns.
Though, the market depleted further this week, analysts still expect that investors should still key into the opportunities which most underpriced but value stocks offer speculators ahead of possible future rebound.
Volatile forex market, not too impressive third-quarter (Q3) earnings by companies and recent wave of overbearing regulation are all taking a hit on the local stock market.
“Sell pressure in equities is likely to be sustained this week as unfolding events in the market compel the need for caution,” said research analysts at United Capital plc in their recent view on the Nigerian market.
They also expect the pressure to wane slightly in the week “given current low prices and attractive valuations (market P/E now 8.8x versus 12.4x or MSCI EM Index). Thus, we see the equities market closing the week marginally negative.”
Just last week, the performance gauges of the Nigerian bourse tilted south due to selloffs in blue-chip stocks. The NSE All-Share Index (ASI) and market capitalisation depreciated by 2.78% to close last Friday at 29,177.72 points and N10.028 trillion respectively. Similarly, all other Indices finished lower during the week with exception of NSE Insurance index that chalked up by 0.24%, while NSE ASeM Index closed flat.
“We anticipate lackluster performance mainly due to the below stellar earnings release of several non financial companies,” according to investment analysts at Lagos-based Cowry Asset Management Limited.
Also, research analysts at Dunn Loren Merrifield said, “in the absence of any catalyst to drive the market currently, the equity market may remain bearish this week.”
They had noted that last month, domestic equities sold off as a result of a number of key events which fuelled market volatility.
“Amongst the most notably are the negative developments in the banking and oil & gas sectors, which further weakened investor-confidence. Also, this was coupled with the near-term outlook of the local currency which remains dim, especially for foreign portfolio managers. The heightened volatility and equity market decline led to a risk-off environment and flight to safety, even as the nine month 2015 results released thus far have been unable to provide the needed stimulus,” analysts at Dunn Loren Merrifield added.
They said in their recent financial market highlights that the domestic equities last week sold off sharply “as a result of a number of key events which fueled market volatility such as negative developments in the banking and oil & gas sectors, even as the 9M 2015 results released thus far have been unable to provide the needed stimulus.”
Iheanyi Nwachukwu
