Capital market volatility seen persisting till Q1 2015

Some capital market operators on Monday said that the equity price volatility in the nation’s capital market would persist until first quarter of 2015.

In separate interviews in Lagos, they said that the market would stabilise after the general elections.

Mazi Okechukwu Unegbu, a former President, Chartered Institute of Bankers (CIBN), said that the capital market would continue to nosedive because of cash dependent policies introduced by regulators.

Unegbu said that unfriendly government economic policies such as devaluation of the naira, brokers and Bureau De Change capitalisation affected market growth and development.

He said that cash induced policies of the government led to loss of jobs, stressing that the nation’s unemployment rate would increase at the completion of capital market operators recapitalization.

“The capital market will continue to nosedive with cash dependent policies introduced by the government,” Unegbu said.

Unegbu said that scarcity of funds in the economy due to the 2015 general elections contributed to the development in the capital market.

He also urged discerning investors to take advantage of low prices of equities at the nation’s bourse to increase their stake in the market.

“This is the best time to buy for people that have excess funds but investors must not borrow to invest in the market,” he said.

Mr Bayo Olugbemi, President, Institute of Capital Market Registrars (ICMR), said the nation’s bourse would not experience stability without increased participation of local investors.

Olugbemi said that increased participation of local investors was crucial to market growth and sustainable development, considering present realities in the country.

He said that the market should map out strategies to increase the participation of local investors to cushion the effect of foreign portfolio investors that were pulling out of the market.

Olugbemi said that many portfolio investors were bailing out from the Nigerian capital market because of naira devaluation, persistent fall in oil price, political instability and security challenges.

“There is always a problem anytime portfolio investors bail out in the market,” Olugbemi said.

The ICMR president said that most stocks were selling below fair value because of the development.

He said that the capital market would not be vibrating as expected because of political and economic uncertainties.

Olugbemi, however, expressed optimism that the market would bounce back because due to low price of equities.

Meanwhile, the All-Share index last week rose by 4122.41 points or 13.60 per cent to close at 34,428.82 due to price gains by some blue chip equities.

Also, the market capitalisation appreciated by N1.39 trillion or 13.60 per cent to close at N11.402 trillion.

United Bank for Africa led the gainers’ table in percentage terms, appreciating by 32.28 per cent or N1.22 to close at N5 per share.

Transcorp grew by 28.90 per cent or 89k to close at N3.97, while Oando Plc gained 26.79 per cent or N4.22 to close at N19.97 per share.

On the other hand, Ashaka Cement topped the losers’ chart dipping by 9.96 per cent or N2.45 to close at N22.15 per share.

International Breweries came second with a loss of 6.81 per cent or N1.77 to close at N24.23, while Caverton Offshore Support declined by 5.36 per cent or 17k to close at N3 per share.

1.86 billion shares worth N12.76 billion were traded by investors in 13,469 deals last week.

This was against 5.41 billion shares valued at N46.47 billion transacted in 22,986 deals in the preceding week.

The Financial Services sector led the week’s activity chart with 1.11 billion shares worth N6.37 billion traded in 7,532 deals.

The Conglomerates sector trailed with a turnover of 467.56 million shares worth N1.66 billion in 830 deals.

The third place was occupied by the Consumer Goods sector with 85.97 million shares worth N2.39 billion accounted in 2,469 deals.


Source : BusinessDay

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