- Not yet Uhuru -Shareholders
Despite the current economic lull, foreign investors in the Nigerian Stock Exchange still managed to boost their stakes by N51 billion, at the end of the first half of 2017, The Point’s investigations have revealed.
This represents an increase of over 100 per cent, as the value of their investments increased from N44 billion as at January 2017 to N95 billion at the end of June 2017.
Total transactions at the market increased significantly by 40 per cent, from N468.5 billion within the same period in 2016 to N714.9 billion in 2017. Within the period, total Foreign Portfolio Investment transactions in H1 (Half Year) increased by 74 per cent, from N189.4 billion to N328.7 billion, while the total domestic transaction increased by 38.4 per cent, from N279.1 billion to N386.2 billion.
Total transactions at the market increased significantly by 40 per cent, from N468.5 billion within the same period in 2016 to N714.9 billion in 2017. Within the period, total Foreign Portfolio Investment transactions in H1 (Half Year) increased by 74 per cent, from N189.4 billion to N328.7 billion
FPI includes sales transactions or liquidation of portfolio investments through the stock market.
SIGNS OF REBOUND
The Chief Executive Officer, SOFUNIX Investments limited, Mr. Sola Oni, explained that the market had experienced a rebound as the indicator for market gain; the All Share Index appreciated by over 23 per cent to close at 33,117.48 on June 30 as against the corresponding period, last year.
According to him, investor confidence has been reinforced by relatively increased corporate earnings that are consistent with forecasts, while some companies actually exceeded forecasts.
He said, “The business environment in Nigeria is becoming more conducive with the stability in the forex market and reduced insecurity level.
“A range of government policies aimed at stimulating economic growth and the use of Made-in-Nigeria initiative have combined to strengthen the investor’s confidence in the economy.”
“There are strong indications that the recession is gradually diminishing, sending positive signals that the next quarter will sustain the current performance,” he also said.
Another stockbroker, Mr. Tobi Akano, said, “The development can be attributed to the improved investor participation, encouraged by an improving economic environment and strengthening liquidity in the foreign exchange market, following the enactment of the Investors and Exporters FX window.”
On how sustainable the development is, the experts explained that the momentum oscillators, in the H1 2017, were showing that the market was in the overbought region, an indication, which to them, meant that profit-taking sentiments could prevail.
The Managing Director, APT Securities and investment Limited, Mallam Garba Kurfi, told The Point that the future held brighter prospects for the market.
“We expect the ongoing optimism regarding a possible shift to a market-determined exchange rate regime to support market performance; we see the impacts of these events on market performance. The overall impact of policy actions would be positive for the economy in the medium to the long-term assessment. A six-month analysis of the first half showed that the market benefited from the newly introduced market-determined foreign exchange policy, which was a boost to investor confidence,” he said.
NOT YET UHURU – CRITICS
Contrary to the optimism of some experts and analysts, critics have warned stakeholders in the market not to be so confident that the development might be sustained in the second half of the year.
The President, Chartered Institute of Stockbrokers, Mr. Oluwaseyi Abe, told The Point that investors needed to be careful in choosing shares to buy in the bourse, as they should ensure that the development had not deceived them into investing in any non-prospected sector of the market.
According to him, prospective investors should identify companies that have the potential of benefitting from new economic policies, such as the agro-allied firms, before buying the stocks. He said shares of such companies stood a chance of yielding good returns in the near future, adding that investors needed to increase their participation in the market, increase the capitalisation and stimulate the market for a rebound, especially for the prevailing bad time facing the market.
The CIS boss said, “Currently, penny stocks are good, but investors should look at the direction of the Nigerian economy. They should identify firms that can benefit from new policies that can drive the economy. These companies are both large and small.
“Budgetary discipline, fiscal incentives and enhanced security network, among others, would define the extent to which the current market gains can be sustained. We should not lose the fact that our stock market simply mirrors the economy and it is forward-looking.”
Also, the National Chairman, Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, explained that the growth might not be sustained except there were more firms, which could employ Nigerian youths, and grow the Gross Domestic Product.
“The companies we need are those that can build factories and create employment for graduates, not those who come here, make their profits and check out at any slightest challenge,” he said.
RETURN OF THE BULLS
– NSE
The Chief Executive Officer, Nigerian Stock Exchange, Mr. Oscar Onyema, had assured investors that the bulls in the market were back and advised them to take advantage of the low prices of equities and invest in the market.
Onyema assured investors of the unwavering commitment of the Exchange to solidifying its leadership position as Africa’s foremost securities exchange.
“With the ongoing market reforms and efforts by the CBN to relieve forex scarcity in the country, coupled with various initiatives, such as improving the ease of doing business by the Federal Government, foreign investors will return and the market will have a better story to tell in Q3 and Q4,” he said.
EQUITIES MARKET RECORDS N2.21TRILLION IN H1
However, activities on the floor of the Exchange in the first half of 2017 yielded profit to the tune of N2.21 trillion, it was gathered at the
weekend.
The period had been a booming period with relatively impressive Return on Investment for investors at the nation’s bourse.
The NSE’s All-Share Index improved with additional 6,242.86 points, representing a 23.23 per cent growth, to close at 33.117.48, being absolute points as at the close of the second
quarter.
With the recorded profit, market capitalisation has also soared by 23.85 per cent within the trading period of six months to now stand at N11.452 trillion.
