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Investors, traders stay cautious on election concerns

By on February 3, 2015

Investors and traders have retained a cautious stance as a result of concerns about the fast-approaching general elections, among other issues, it has been learnt.

According to analysts, the development may cause the market to witness a bearish trend this week.

Analysts at Vetiva Capital Management Limited said trading for the week could have a negative bias.

“As we enter into the month of February with two weeks to the elections, we expect trading on the NSE to remain largely cautious with a negative bias,” they said in their market commentary for the week.

This follows a week they described as tepid on the Nigerian Stock Exchange.

Concerning last week’s performance, they said, “In the absence of any major catalyst, sentiment remained tepid on the Exchange this past week with the NSE ASI mustering only modest gains in two sessions. Bearish sentiments, however, strongly resurfaced at week close with the NSE ASI closing lower over the last two trading sessions of the week. Overall, the ASI declined 0.84 per cent week-o-week.”

The analysts also maintained a bearish outlook for the Treasury-bills market.

They said, “We expect more OMO auctions by the Central Bank this coming week to further reduce market liquidity following rDAS refunds of the past week. Consequently, we maintain a bearish outlook on trading in the T-bill market even as traders are likely to take a cautious stance in view of higher stop rates at the Wednesday Primary Market Auction.”

Analysts at Meristem Securities also noted that the market was mostly negative in recent times.

They explained that the development had been largely due to the reallocation of resources by investors to less risky investment.

The Meristem Securities analysts said, “As the general elections draw nearer, and the level of uncertainty in the economy is being further pressured by declining oil prices, the equities market has been greatly hit, as investors reallocate resources towards less risky investments. Consequently, the market recorded losses in three of four trading weeks in January, and the NSE ASI declined by 14.70 per cent.”

They, however, remained optimistic that the financial markets would be positively affected by news flows.

 

[Punch]