Analysts Forecast Positive Close For Equities In December
Despite the continuing bearish trend that has led to a decline of 19.9 per cent so far, analysts at FSDH Research have projected a positive close for the market in the month of December.
The stock market has remained bearish due to both internal and external headwinds, leading to a negative close for the month of November with a decline of 4.9 per cent. But analysts at FSDH Research said December would be a bullish month considering the performance trend in the last six years. They also said most of the stocks are in oversold positions and this may attract the interest of domestic investors.
“FSDH Research expects to see increased activities in the equity market in December 2018 as well as an appreciation. We note that most share prices are in oversold positions and these stocks may attract the interest of domestic investors. The Fund Managers’ strategies to position in the market towards year-end may also drive the market up in December. However, we note that some investors will continue to tread carefully in the equity market, particularly because of election considerations. We reiterate that the market has strong growth potential for investors with a medium-to-long-term view,” they said.
They explained that performance of the equity market in the last six years shows that the market recorded upward movements between November and December. In 2012, for instance, the performance between November and December was 5.98 per cent growth. In 2013, it was 6.19 per cent growth, while it was 0.33 per cent, 4.59 per cent, 6.4 per cent and 0.79 per cent in 2014, 2015, 2016 and 2017 respectively.
“Looking at the oversold position, the equity market may appreciate in December 2018,” FSDH Research said.
Giving investment strategies, the analysts said investors can gradually enter the equity market through cost-averaging investment strategy.
“Investors should position in stocks that have good fundamentals. We see opportunities in the banking, consumer goods, food and beverages, building materials, and oil and gas sectors of the equity market. Investors can buy stocks that pay dividends,” they said.
The market depreciated by 4.9 per cent in November due to the continued pullback from foreign investors as a result of political considerations and rising global yields. The increased yields on fixed income securities in Nigeria also led to reallocation of portfolios away from the equity market.
FSDH Research observed an increase in the volume and value of stocks traded in November, mostly as a result of significant trades on Zenith Bank. The volume of stocks increased by 7.46 per cent to 5.44 billion shares in November. Similarly, the value of stocks traded on the NSE in November increased by 23.28 per cent to N74.86 billion, from N60.73 billion in October.
Zenith Bank Plc (1.11 billion shares), Diamond Bank Plc (669.19 million shares), FCMB Group Plc (481.90 million shares), Access Bank Plc (374.71 million shares), and FBN Holdings Plc (368.68 million shares) were the five most highly traded stocks in November.