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The emergence of many stocks selling at below book value and speculation that global bargain hunters may have set their sights on Nigeria appear to be combining to lift sentiments in the Nigeria Stock exchange where the positive trend which commenced Monday persisted yesterday.
“The return of confidence may be a way out but interest in a number of equities is definitely rising,” a leading market analyst told BusinessDay last night.
“We do not know if this marks the gradual return of investor confidence or whether the rising interest is going to be targeted and shortlived because liquidity is still tight,” the analyst with considerable international exposures said.
Market watchers confirmed that the current outlook of the market indicates that investors are building up courage to invest in selected equities with the promise of high dividend or bonus offer or both.
The Nigerian Stock Exchange (NSE) All Share Index appreciated further by 1.20 percent to close at 23,594.06 points from 23,314.96 points, compared with the gain of 1.66 percent recorded on Wednesday.
The market capitalisation also appreciated by 1.25 percent to close at N5.28 trillion, as against the previous day’s N5.22 trillion.
Analysts put the return on the index year-to-date (YTD) at -24.98 percent, reversing some of the losses of 2009.
The gain recorded in the index was on account of appreciation in the share prices of some highly capitalised stocks such as Flour Mills, UACN, Guaranty Trust Bank, Oceanic Bank and UBA.
Some investors say they are counting on one Naira dividend per share for GTBank plus a bonus while others have the expectation that in due time 0ceanic will offer at least one Naira per share dividend as well.
Still some investors are encouraged by on going moves to strengthen the Securities and Exchange Commission which they say will lead to a clean up of the market.
Oba Otudeko, president of Council of the NSE, had told financial journalists last week that measures were put in place that eventually translated to a turnaround in the market indices.
His term as president expires soon and his place will most likely be taken by Aliko Dangote whose tenure many expect to usher in changes at the exchange.
Last night stockbrokers who spoke on the improving market indicators pointed to the fact that Nigerian equities have been grossly undervalued and look very cheap given the strong fundamentals of quoted companies.
Eugene Anenih, a stockbroker and chief executive of Nova Securities, told BusinessDay that confidence is returning to the market, adding that foreign investors have equally started to look at the market again based on the fundamentals of the companies.“
It is true that confidence is coming back into the market and foreign investors have started making enquiries.
The market indicators point to the fact that prices are very cheap and we expect the development to continue.”
According to him, should the current rally continue in another two weeks, the market may gradually pick up before the end of the first quarter. “For the next trading sessions, we expect a further continuation of the positive trend,” he remarked.
Meanwhile, operators noted that the stock market had lost N7.4 trillion of market capitalisation over the last 11 months, a development that led to foreign investor flight of between $7 to $8 billion as well as a significant crisis of confidence among domestic investors.
According to the Association of Issuing Houses of Nigeria (AIHN), stockbrokerage firms and capital market operators have been affected by the downturn, and it is estimated that they may have borrowed up to N350 billion from banks to invest in the market.
source:bUSINESSDAY, 27 February 2009. |
