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Investors Gain N350bn In August As NGX Maintained Upbeat Trend

The nation’s equities market has recorded improved performance in the month of August, 2021 as investors investment went up by N350 billion.

The NSE ASI which opened the month of August at 38,547.08 points, appreciated by 1.74 per cent to closed the month at 39,219.61 points on August 31, 2021. Also market Capitalisation of listed equities gained N350 billion within the period under review to N20.434 trillion from N20.084 trillion it closed at end of July 2021.

Capital market operators attributed the improved performance of the market to the strong first half (H1), 2021 corporate earnings and improving macro-economic indices shown in the second quarter (Q2) GDP quarter-on-quarter growth of 5.01 per cent.

According to them, this confirms the recovery in the country’s economic position, offering an insight into what the future holds for the stock market and economy in general.

Speaking on market performance for August, the vice president of High cap securities, Mr David Adonri said the stock market in August regained lost ground and it replicated the recovery that started in the last quarter.

According to Adonri, the marginal increase is a factor of released results. He explained further that the stock market is expected to maintain the same trend in September considering the fact that the macro-economy conditions are improving with increasing GDP and drop in inflation rate. The crude oil price is also high and government visits the market for more bond issuance

The managing director, Enterprises Stockbroker Limited, Mr Rotimi Fakayejo attributed the stock market marginal growth to released report by listed companies.

According to him, the performance of stock market in August not encouraging but the market closed positive, which signal a good development.

“We witnessed lower volume of transactions in August and July. The volume of transactions on NGX not encouraging because the daily average is trending towards one billion shares and 1.5 billion shares, unlike before it used to be two billion shares.”

Meanwhile, the former president of Association of Stockbroking Houses of Nigeria (ASHON), Mr Emeka Madubuike said that “The stock market has been very unstable in August, considering the prices of listed stock on NGX dropping significantly.

“There is no specific factor contributing to the marginal increase in stock market performance. The level of uncertainty in the stock market is too high and I am surprised the market closed positive in August. The economy situation does not justify the increase in market performance last month despite growth in GDP.

For Q4 2021, he said, “I can not really predict how the stock market will be in last quarter of 2021 due to policy summersault.

“It is so tough but I think the market will be flat this year. The truth is that government after government has not believed in the stock market. So, you do not expect any policy targeted at reviving the stock market this year.

“The foreign exchange is critical component that determined how the stock market behave and foreign investors participation can be discouraged if situation on ground not friendly.”

On the outlook of the market, Cowry Asset Management Limited in its report titled ‘Review, Outlook and Investment Strategies for H2 2021’, said that “Nevertheless, against the anticipated growth in real output, expectations of increased corporate profits and an expected moderation in fixed income yields, we expect the equities market climb northwards in H2 2021.

“Therefore, we expect investors to bargain hunt for undervalued stocks; particularly of those companies likely to sustained, and possibly increase, interim and/or final cash dividend payments.

“This will be more appropriate for investors seeking passive income on a long-term basis while having enough cash on hand for strategic investing. Active investors/ speculators should focus more on growth and high beta stocks while also looking to by the dip while having enough speculative cash on hand for tactical maneuvers. Again, investors should be wary of those factors that could create economic headwinds and adjust their portfolios appropriately.”

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