Investors may show further interest in listed Nigerian equities, a reflective of their increasing confidence in Africa’s biggest economy, following recent speed of reforms which are capable of spurring economic growth.
Most market analysts turned positive about Nigeria equities this week signposting renewed interests in naira assets. In line with their outlook this week, they expect stock buyers at the local bourse to further increase their equities wagers, though not without activities of profit-takers.
While the 2016 budget which was one of the factors that hitherto dragged investor confidence and business activities southward was signed into law by President Muhammadu Buhari, investors showcased their upbeat mood after last week’s deregulation of the downstream oil and gas sector.
The Nigerian Stock Exchange (NSE) All Share Index (ASI) appreciated by 2.88percent to close last week at 26,441.03 points from 25,701.60 points, while the equities market capitalisation rose to new highs at N9.099trillion from week open level of N8.841trillion as investors showed strong buying interest at the local bourse, adding N258billion in just one week.
In demonstrating further their bullish bias, stock investors raise their equities wager at the Nigerian Stock Exchange (NSE) which attracted about N77billion at the beginning of this week’s trade.
“Barring proposed disruptions to trading activities by the actions of the national labour union, we anticipate another positive week for equities this week, as optimism from investors’ positive expectations on domestic economic reforms continues to drive demand. Foreign money managers are also likely to watch closely, as news around possible review of the FX policy framework gathers momentum”, said analysts at United Capital plc.
Market analysts at Meristem Securities said: “We anticipate increased position taking on counters perceived to be positively impacted by the recent news inflows (budget implementation and new fuel price), including companies within the building material, construction, and Oil and Gas sectors. We however note the possibility of profit taking on counters that have accumulated gains during the week concluded.”
Team of economic intelligence at Access Bank plc noted that the rally witnessed last week at the equities market represents the highest weekly returns in five months. “Investors’ appetites for equities were renewed last week following the hint that Government may soon review its exchange rate policy.
This week, we anticipate that the positive momentum will continue, thus further driving indicators higher”.
“Nigerian equities closed the past week with a bullish bias. The Nigerian equity market maintained a positive momentum at week open as investors continued to cheer the recent developments in the Downstream Oil & Gas sector. Whilst the sustained positive investor sentiment presents a case for further gains for the NSE ASI, we highlight that the worrisome inflation print could dampen market sentiment,” said Vetiva Capital analysts.
Also in their views, equity analysts at Lagos-based Cowry Asset Management Limited said, “This week, we envisage more bargain hunting activities in the light of a renewed interest for risky assets.”
“The Nigerian bourse may extend its bullish streak this week if the prevailing investors’ optimism continues”, said research analysts Dunn Loren Merrifield.
Iheanyi Nwachukwu
