Some market operators have said that despite the current positive trend been witnessed at the Nigerian capital market, the nation’s bourse is still underperforming.
Bismarck Rewane, managing director of Financial Derivatives Company Limited, a business consultancy firm, said in spite of the upward trend in the market because of “impressive earnings announcements that spur investors, the lack of market depth still serves as hindrance to stock market full recovery.”
Speaking recently at the monthly breakfast meeting of the Lagos Business School, Mr Rewane said, on year-to-date performance, the Nigerian capital market which is an emerging market is “among the worst performing markets; next to Brazil.” He said foreign investors still exhibit risk sentiments in the market. However, he said the outlook of the market in the coming weeks is “generally positive with expected slow recovery.”
Stockbrokers at GTI Capital, a stock broking firm, attributed the current positive sentiment in the market to investors’ enthusiasm in some blue chip stocks. “Sustained investors’ enthusiasm on some blue chip stocks, especially those that have made their recent earnings available in the market appeared a major catalyst to the current ride in the market,” they said.
Explaining further, the stockbrokers said there was a noticeable improvement in the number of stocks that appeared on gainers’ list recently. “The improvement in the number of stocks substantively boosted indicators’ growth recently,” they said, adding that “an important hindsight here is the fact that the bullish stocks were more of mid and low capitalised stocks. This shows that the market is gradually gaining improved confidence from the investing public.” Bond market
Meanwhile, some investors have continued to invest in the safe haven of bonds over equities as trading activities at the bond market enjoy more patronage.
Olugbenga Emmanuel, a finance analyst at WealthZone Company, a portfolio management company, said the bond market enjoyed good patronage by the investing public because “bonds are secured products of the Exchange with guaranteed income and capital repayment, while equities are volatile in nature.”
Mr Emmanuel said that investment in bonds, especially government bonds, is more secured because “capital is always guaranteed with interest.” Last week, the bond market recorded a turnover of 262.7 million units worth N231.452 billion, in contrast to the 156.26 million units valued at N135.869 billion exchanged during the previous week.
The most active bond, measuring by turnover volume, was the 10 percent Federal Government of Nigeria (FGN) Bond July 2030 (7th FGN Bond 2030 Series 3) with a traded volume of 81.2 million units valued at N66.300 billion. This was followed by the 5.5 per cent FGN February 2013 (7th FGN Bond 2013 Series 1) with a traded volume of 65.6 million units valued at N61.549 billion. A total of 16 of the available 30 FGN Bonds were traded during the week, same as in the preceding week.
