Stocks’ new lows offer re-entry opportunity for bargain hunters

Nigerian stock market’s recent decline has further created an opportunity for bargain hunters to reposition in most of the value counters.

The value of listed stocks on the Nigerian Stock Exchange (NSE) decreased by approximately N185billion in the trading week ended September 6, 2019.

Considering the review week’s loss, most value stocks listed on the Bourse now trade at their record lows, making them attractive to value investors for reconsideration.

Despite the current bearish trend in the market, FSDH Research analysts still see opportunities in the equity market. They see prospects in stocks that have history of good performance and good dividend payment.

While noting that the short-to-medium term outlook of these stocks is good, FSDH Research urged investors should to position in them as “their share prices have recently dropped significantly”.

Amid negative market breadth and waning activity the NSE All Share Index (ASI) extended its bearish trend to the last trading session of the week. This led to a negative week-on-week (WoW) performance of -1.38percent and year-to-date (YtD) negative return of -13.63percent.

“Valuations and technical analysis show that price levels remain attractive for medium and long term investors”, said Vetiva research analysts in their September 5 note.

The analysts noted that with profit-taking activities dragging the market in the past three sessions, as well as the weak sentiment which dominated trading in the review week, “investors appear less optimistic on the performance of the Bourse.”

“Therefore we foresee further negative trading at the start of next week, barring any market catalyst to spur positive activity,” they added in their September 6 note.

The value of listed stocks decreased to N13.206trillion from a preceding week high of N13.391trillion while the All Share Index closed lower at 27,146.57 points against 27,525.81 points as at August 30.

Lagos-based Afrinvest Research analysts had in their September 2 note said they expect the Index to continue to wander within the negative territory.

“But why are we pessimistic? All indicators strongly suggest there are no possible triggers to herald a rebound in the near term”, the analysts said.