Operators of the Nigerian capital market have said that the equities market in the fourth quarter would experience mixed performance following the consistent fluctuation recorded in the last nine months.
They also noted that the market may not experience significant growth at the end of the year due to the 2015 general elections as foreign investors, who are the drivers of the market, are skeptical of the likely outcome of the elections.
A review of the stock market performance showed that in the first quarter, the market recorded a negative return of 6.25 per cent and made a reverse to post an increase of 9.64 per cent in the second quarter while it recorded a loss of three per cent in the third quarter.
So far, from January to September, 2014, the market capitalisation of the Exchange appreciated by N381 billion or 2.88 per cent from N13.226 trillion to N13.607 trillion on September 30, 2014.
Also reviewing the sectoral indices year-to-date showed that the NSE 30 Index, which tracks the performance of large cap stocks, declined by 1.65 per cent. NSE Banking, Insurance, Consumer Goods and Islamic Lotus went down by 4.32, 2.92, 7.71 and 5.84 per cent respectively. While Oil and Gas went up by 35.73 per cent and Industrial Goods up by 7.56 per cent.
The market operators have attributed the low performance in the stock market to the uncertainties surrounding the preparations for the 2015 elections, tapering of quantitative easing by United States Feds, further tightening of monetary policy, weakening of the naira, among others.
However, the stockbrokers have said that investors’ expectations for third quarter results of companies would impact positively on the equities market this quarter.
According to the managing director of Highcap Securities Limited, Mr. David Adonri, judging by the political situation as the general election draws near, the market may remain sluggish throughout the fourth quarter.
However, he noted that the Market will reward stocks with good third quarter performance, saying “the expectations of good third quarter results may drive the equities market”.
He pointed out that so far, the equities market has year to date declined, while attributing the decline to rising political risk as general election draws near, tight monetary policy, declining value of naira, rising insecurity, Ebola crisis and tapering of quantitative easing in America among others.
A stock analyst with Golden Securities Limited, Mr. Tunde Oyediran, said “Third quarter is always marred with bearish market situation. It is usually caused by low expectation within the period, which culminate into low patronage by both local and foreign investors.”
Oyediran stated that market in the last quarter of the year will be upswing as levels of activities will increase in volume and values, saying that the major factor that will trigger this performance is increased expectation for better third quarter and end of the year results.
He foresees an in increase activities in the market in the fourth quarter, saying that there will be renewed interest in the market in the last quarter of the year as investors would invest in anticipation of better performance and reward from the companies.
The financial analyst with InvestData Consulting Limited, Mr. Ambrose Omodion said that the capital market would remain cautious and undecided, although it may not witness a major decline.
According to him, the outlook for the market is unclear as the market has so far failed to respond to a number of impressive corporate financial announcements of listed companies.
He noted that current developments in the country such as insecurity, economic instability and uncertainties over 2015 elections were discouraging investment.
According to him, numerous investors were still withholding their investments in Nigeria due to uncertainties and lull in economic activities following the forthcoming elections.
Meanwhile, a look at the market for last week showed that the market capitalisation appreciated by N94 billion to close at N13.572 trillion when compared with the N13.478 trillion posted the previous week. Equally, the All-Share Index decreased by 284.03 points or 0.70 per cent to close at 41,103.94 as against the 40,819.72 achieved the previous week.
Analysis of the price movement chart for last week indicated that Ikeja Hotel topped the gainers’ table by 31.58 per cent to close at N2 per share. Champion Breweries came second on the activity chart with 27.32 per cent to close at N12.35, while International Breweries appreciated by 15.69 per cent to close at 59 kobo per share.
On the other hand, R.T. Briscoe led the losers’ chart for the week by 12.37 per cent to close at 85 kobo per share. May and Baker trailed with a loss of 9.95 per cent to close at N1.72, while Vono Products rose by 8.97 per cent to close at N1.42 per share.
Source : Leadership