Some market
operators have urged investors to trade cautiously following the recent
growth in transaction volume at the Nigerian Stock Exchange (NSE),
despite the wobbly market performance.
A recent data from
the NSE showed that in the last two months the volume of shares traded
recorded a growth of 31.93 per cent, while the market value recorded a
growth of 16.81 per cent in the review period. Transaction volume of
shares and market value also moved up by 51.61 and 70.49 per cent
respectively, on Wednesday when compared to the previous day’s figures.
While the Exchange
attributed the growth in volume and value to increase in investors’
patronage in the market, Oladele Odusanya, managing director and chief
executive officer of Quantum Securities Limited, a stockbroking firm,
said, “Investors should do analytical trading instead of speculative
trading.” Mr. Odusanya said the present situation in the market poses
opportunities for long term investors, adding that “as the market is
rebounding, it is advisable to buy when stocks are undervalued, and
sell the moment they are overvalued.”
Good return
Bola Oke, a finance
analyst at WealthZone Company, an investment management firm, said
investors should always consider equities in some sectors in order to
get good return on investment.
“Before the
consolidation exercise that brought about the banking and insurance
stocks to the market, investors always put their monies in food and
beverages, breweries and conglomerates stocks because the companies
usually pay good rewards,” Mrs. Oke said, adding that even after the
banking sector started dominating the market, “investors still continue
to partronise these sectors because many of their stocks are blue
chips.”
She said that some
of the stocks in these sectors are good because “they have historical
stability, competitive advantage, and high level of profitability.”
Mrs. Oke, however, advised that “investors should put money in
companies that are consistent in dividend and bonus declaration.”
Meanwhile, the
national chairman of the Progressive Shareholders Association of
Nigeria, Boniface Okezie, said until the government intervenes and
compel banks to give long-term loans to manufacturers, the performance
of some companies at the Exchange will continue to be unattractive to
investors.
Citing areas where
manufacturers need intervention, he said lack of electricity,
deplorable road conditions, high lending rates and multiple levies are
issues that government must address to help cushion the harsh operating
environment.
Mr. Okezie said market regulators should improve on rules that will
attract investors, adding that “the Securities and Exchange Commission
seems unprepared to regulate the market.”
