As investors gain N24bn
By Nkiruka Nnorom
STILL relishing the outstanding performance in the equities market last year, investment bankers and stockbrokers have listed factors that will help in driving the equities market during the course of the year.
Some of the factors, according to them include, gains in tier-2 banks, continued recovery in the consumer goods sector, ability of the Central Bank of Nigeria, CBN, to contain inflation in 2018 and move by the federal government to reduce rate of borrowing.
This comes as investors gained a total of N24 billion in the first four trading days of the year.
In his projection, Patrick Ezeagu, Managing Director, Solid Rock Securities Limited, said the current government appears to be gearing up to make some degree of expenditure with respect to capital project this year.
He stated that the action would have a trickle-down effect on the economy generally and ‘once people have some level of disposable income, it will encourage some degree of savings as well. We are thinking that it will eventually come into the market and help to push up the market”.
“The second thing is the fact that this government is trying to reduce the cost of their borrowing. You discover that Treasury bill rate is coming down; people will now start to move to the good side of the market, which is the capital market. With all these, I am thinking that barring any upheaval within the market space, this year will be better than last year,” he added.
Analysts at Vetiva Capital also posited that the market would end the year (2018) on a relatively bullish note driven by strong growth across undervalued tier-2 banking names and a continued recovery in the consumer goods sector.
They noted that steps to improve corporate governance and investor sophistication are necessary to achieve the desired level of market deepening and diversity within the year.
They added that initiatives such as a thriving derivatives market and demutualization of the Nigerian Stock Exchange, NSE, would act as precursors to the positive momentum expected in the market, but, however, said that adverse shocks to the macro-economy or oil sector would truncate market expansion for the year.
Tola Odukoya, CEO, FSL Asset Management Limited, said, “If the CBN is able to contain inflation rate and if we begin to see decent returns coming out from our listed companies, particularly, I think this year will be positive for the financial market”.
Meanwhile, the equities market continued to consolidate the gains of last year as NSE All-Share Index and market capitalization appreciated by 1.78 percent to close at 38,923.26 points and N13.85 trillion from 38,243.19 points and N13.61 trillion respectively.
A total turnover of 2.417 billion shares worth N18.813 billion in 20,874 deals were traded by investors in contrast to a total of 1.31 billion shares valued at N12.635 billion that exchanged hands the previous week in 9,016 deals.
The financial services sector, measured by volume, led the activity chart with 1.677 billion shares valued at N8.734 billion traded in 13,033 deals; thus contributing 69.39 percent and 46.43 percent to the total equity turnover volume and value respectively.
The conglomerates sector followed with 536.922 million shares worth N1.258 billion in 1,288 deals, while the consumer goods sector ranked with a turnover of 100.460 million shares worth N6.951 billion in 3,426 deals.
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