The stock market recorded a turnover of 12.07 billion shares worth N44.39 billion in the first two months of 2017, showing the weak investor demand for equities. An analysis of the performance showed that January accounted for the highest turnover as investors traded 7.68 billion shares valued at N47.33 billion. The month of February accounted for 4.39 billion shares worth N37.06 billion, showing a decline compared to the month of January.
The month of February also recorded a decline in market value as the Nigerian Stock Exchange (NSE) All-Share Index (NSE ASI) depreciated by 2.72 per cent. Apart from the NSE ASI, all the sectoral indices declined in February 2017 compared with January 2017, except the NSE Banking Index which remained flat. The NSE Consumer Goods Index recorded the highest depreciation of 11.03 per cent. The NSE Industrial Index recorded a decline of 8.59 per cent, while the NSE Oil/Gas Index fell by 3.7 per cent. The NSE Insurance Index declined by 1.5 per cent.
However, analysts at FSHD Merchant Bank Research are bullish on the month of March, saying that the market would record positive performance.
They hinged their optimism on the trend in the past five years. According to them, the performance of the equity market in the last five years showed that the market recorded
positive performances between February and March.
For instance, in 2012 the market rose by 3.07 per cent between February and March 2012, 1.39 per cent in 2013, declined by 2.05 per cent in 2014. It appreciated by 5.4 per cent in 2015 and 2.9 per cent in 2016.
“The equity market may follow historical trend as the economic outlook becomes increasingly positive,” the analysts said.
In their outlook for the month of March FSDH said they expect to see some improvements in investor appetite for investment in 2017.
“The following factors may drive performance: improved supply of foreign exchange at the foreign exchange market; improved confidence on the outlook of the Nigerian economy, the increase in oil prices and production and expected gradual return of foreign investors into the (equity) market,” they said.
Commenting on the strategies to adopt by investors going forward, the analysts recommended that investors should maintain a medium-to-long term position in the equity market.
“We maintain that long-term investors should take long positions in the stocks that have strong fundamentals. Building materials, food and beverages, agro-allied processing and banking stocks,” they said.
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