A four-day gaining streak recorded at the Nigeria Stock Exchange (NSE) in the last trading sessions was not good enough to put the nation’s stocks on a positive trajectory just like their peers in most emerging markets.
In spite of the market rally triggered by bargain hunting on the backdrop of cheap valuations of stocks with sound fundamentals, according to Gbolahan Ologunro, an equity analyst at CSL Stockbrokers, Nigeria’s stock market lost 4.11 percent in value so far this year.
This placed the Lagos bourse as the world’s fourth-worst performing among emerging markets at the close of business on Tuesday, after Serbia, Romania and Bulgaria.
Argentina is leading other emerging markets, rising 11.48 percent so far this year. Oil-rich Saudi Arabia followed with 7.72 percent return, while Brazil’s Bovespa has flied to a 7.51 percent gain.
Emerging markets were the greatest hit in 2018 following a four-time interest rates hike by the United States Fed Reserve which triggered exits of foreign portfolio investors from the markets to take advantage of higher returns in the country and other developed nations.
Nigerian stocks were down 17.8 percent last year, the biggest since 2009. The trend has not changed as the nation prepares to go the polls next month.
This coupled with increased cases of violence and low prices of crude in the international market continued to build up uncertainties in the Nigerian market, thereby weakening investor sentiment.
“The election is what is affecting the sentiment towards the market,” Ayodele Ebo, managing director, Afrinvest Securities Limited, told BusinessDay. “The election is a concern to investors. Notwithstanding, in terms of volumes, investors are also taking positions, but not very aggressive.”
Oscar Onyema, NSE chief executive officer, had at a media briefing on Monday noted that the market would perhaps be volatile in the first half of 2019.
“We believe swift approval and implementation of the 2019 budget will have a positive impact on companies’ earnings as well as consumer spending. Therefore, we expect an uptick in market activity during the second half of 2019,” Onyema said.
OLUWASEGUN OLAKOYENIKAN
