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Will equity investors who sold in May stay away?

Will equity investors who sold in May stay away?

“Sell in May and go away” is a well-known financial-world adage. Just like this maxim, the month of May didn’t go well for investor in Nigeria’s listed stocks amid record N813billion they lost in the review month.

Notwithstanding the positive market close on Monday, May 31, the beginning of a new trading week, feeling on Custom Street, Lagos where the Bourse of Africa’s largest economy is headquartered remains remarkably lopsided to the bearish side.

Following a significant rally in some specific counters last week as well as rise in value traded, some analysts had expected new week’s trading to kick off on a similar note. For instance, at the beginning of this week, the market closed in green but with more losers than gainers.

The question now is whether the record selloff in May which creates opportunities for bargains in value stocks seen trading at new lows, will upscale the Bourse buy-side activities or that investors who sold these stocks in review month will choose to stay away for a while?

The month of May which yielded negative return in excess of -3.52percent helped push the equities market negative returns year-to-date (ytd) to a high of -4.55percent.

Read Also: Nigeria’s equity investors caught in web of N600bn loss

In their outlook for this week ending June 4, 2021, equity analysts at GTI Securities expect mixed sentiment, “as recently appreciated stocks will reverse their downturn, while the recently appreciated stocks may experience a mild correction”.

Trend watch shows that the market’s twin indicators –the All-Share Index and Market Capitalisation which had opened May’s trading session at 39,834.42 points and N20.847 trillion respectively decreased to close at 38,437.88 points and N20.034trillion.

“We expect a short term rebound in the equities market as sell pressures dissipate, giving room for the bulls to regain temporary control of the market in a tight trading week. We also expect investor sell-offs and profit-taking in insurance stocks which rallied in the previous week”, said research analysts at Lagos-based United Capital Plc.

Taking similar view, Meristem analysts said they expect the Monetary Policy Committee’s (MPC) decision to retain the benchmark rate and other policy parameters to have muted impact on the equities market.

“Barring any significant positive triggers this week, we think investors’ sentiment, which has remained predominantly bearish, would dictate the market’s direction. Conclusively, we expect the equities market to close in negative territory this week”, Meristem analysts noted.