Bearish trend may persist till after polls – Analysts

Analysts in the Nigerian capital market have predicted that capital market activities may not pick up till after the April elections.

This is despite the impressive results released to the Nigerian Stock Exchange by major banks and other sub-sectors in the past few weeks.

Analysts at Meristem Nigeria in their weekly report noted that the bearish trend in the market might persist until the elections were over.

This, they said, was because a lot of investors were selling off their shares at this period to be able to fund their campaign activities, while some other investors had adopted a sit-and-watch attitude to see the direction that things might take.

According to experts, this is due to the fact that investors had lost over N800tn from January till date.

Following the release of the year-end results of Guaranty Trust Bank Plc, Access Bank Plc and Zenith Bank Plc early last week, investors and market operators had heaved a sigh of relief as major market indicators were lifted by 0.8 per cent.

The market capitalisation of the listed equities rose by N68bn or 0.8 per cent to close at N8.077tn, while the NSE’s All-Share Index also rose by 0.8 per cent or 213.96 basis points to close at 25,281.03.

However, the upward trend, which lasted for about three days, could not be sustained due to the general problem of illiquidity in the economy, as the market capitalisation and the Index fell by 0.8 per cent each last Friday, to close at N7.944tn and 24,863.38 points respectively.

The analysts at Meristem said, “The duration of the bearish market trend will, however, extend into the election and then wane sporadically. We had in our previous publications expressed our views concerning the state of the market, highlighting that amongst other factors, Japan’s earthquake-spawned nuclear crisis, uprising in the Middle East region, rising commodity prices, IMF Policy comment on exchange rate management and fragile investor confidence have been responsible for the obstinate down pressure in the market.

“We likewise identified potential key upside driver that will lighten the market mood. We expressed that there would be bullish spikes conditioned on better-than expected earnings scorecards and corporate actions from the banking sector, and this was clear from the market direction last week.”

The Managing Director, Ideal Securities Limited, Mr. George Okafor, said that the bearish trend was caused by investors, who were hungry for short-term profits.

He said that this was due to the fact that they were afraid to wait for the long-term profits, as the market usually dropped, and they would end up losing more

The market operators, however, advised investors to take advantage of the current low-priced shares in the market in anticipation of the up-coming post election rally.

Source : Punch