The Association of Securities Dealing Houses of Nigeria (ASHON) has cautioned embattled equity investors against a panic sale of shares to avert avoidable losses. They believe that the stock market would soon embark on a bullish trend.
This advice comes amid a loss of about N316billion recorded in the trading week ended Friday July 19. Despite the positive end to the review week of bearish trading, analysts foresee a negative performance at week open.
The stock market declined by 2.27percent in the review trading week, while year-to-date (YTD), the negative returns increased to 11.17percent. The Nigerian Stock Exchange (NSE) All-Share Index (ASI) and market capitalisation decreased from a week-open high of 28,566.79 points and N13.922 trillion to 27,919.50 points and N13.606trillion respectively in the review week.
Amid this disappointing trend, securities dealers urged investors to take advantage of stockbrokers’ sound professional advice before taking an investment decision.
Patrick Ezeagu, ASHON’s Chairman who linked the on-going downward swing situation at the Bourse to the unnecessary panic sale said many investors adopt herd instinct whereby they sell off just because others are selling.
Ezeagu noted that two investors may not necessarily have the same motive for sale or buy order, saying this is where the need for professional investment advice from stockbrokers becomes compelling.
He stated that a trend analysis of corporate earnings in recent times indicates that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the upward movement of their share prices.
Ezeagu explained that there was nothing unusual about this as the market generally reflects the trend in the economy, hence, investors buy into the future of these companies on the expectation of higher shareholder value.
“Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decisions in one second. Our Stock market is forward-looking. Investors need not be nervous. They should consult professional stockbrokers for sound investment decisions. There is no basis for the panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on the panic sale of shares?
“Globally, the stock market gauges the mood of the economy like a barometer. Our market is not a local one. Foreign investors have significant stakes because their analysis has always convinced them that our market has the potential for a strong Return on Investment (ROI). At the moment, core investors are awaiting a couple of things, including the announcement of ministers of the Federal Republic and the Economic Team to show the clear direction of the government.
“These are issues that are beyond the Board and Management of The Exchange but have dire consequences on investment decisions
The bearish trend has to do with the fact that the government is yet to settle down after the elections. However, astute and professionally guided investors should take a position now that most stocks are trading lower than their net realisable asset value and expect handsome returns when the market shall eventually rally. A mere study of most of the companies’ performance figures is most informative and points in the direction of a market that will definitely rally as soon as the economic team of government is in place”, Ezeagu said.
Corroborating Ezeagu, a Senior Stockbroker who explained that the era of uncertainty created by unguarded utterances of the elites before the general election was over affirmed that the market fundamentals remain strong, urged the media to be wary of negative impacts of controversial headlines that can elicit panic sale of shares. The stockbroker advised investors to take advantage of the current low prices of many blue-chip companies to beef up their portfolio.
Iheanyi Nwachukwu
