FSDH Expects Stock To Appreciate, Advises Investors
Financial analysts at FSDH Research, an arm of FSDH Merchant Bank Limited, have said the equity market is expected to appreciate from the current levels as investors await half-year 2018 results.
The stock market closed on a positive note on Tuesday, as the All-Share Index of the Nigerian Stock Exchange rose by 0.83 per cent to close at 39,167.04 basis points, while the market capitalisation increased to N14.188tn from N14.071tn on Monday
In their monthly economic and financial market report, released last Thursday, the FSDH analysts noted that the equity market depreciated for the fourth consecutive month in May.
The Nigerian Stock Exchange All-Share Index depreciated by 7.67 per cent (a loss of 7.75 per cent in dollars) to close at 38,104.54 basis points, while the market capitalisation recorded a month-on-month loss of 7.67 per cent (a loss of 7.75 per cent in dollars) to close at N13.80tn.
According to FSDH Research, some investors attribute the downward trend in the equity market to uncertainty ahead of the general election in Nigeria next year and the fact that some foreign investors are repatriating their maturing fixed income investments due to low yields.
The Head of Research and Strategy, FSDH Merchant Bank, Mr. Ayodele Akinwunmi, said at a press briefing, “FSDH Research believes the equity market is approaching an oversold position. Thus, there may be a reversal of the current downward trend very soon as the economic environment continues to improve.
“The following factors should drive the performance of the equity market: stability in the foreign exchange market due to positive developments in the crude oil market; bargain-hunting investors taking advantage of current prices; strategic positioning ahead of HY1 2018 results, and repositioning of portfolios as a result of the drop in yields on Nigerian Treasury Bills.”
According to the analysts, investors should take strategic positions in the stocks that pay interim dividends and have prospect for capital appreciation from current levels.
“Some stocks in the consumer goods, building materials, petroleum marketing and banking sectors are attractive at their current prices,” they added.