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Stock market investors lose N1.339tn in 3 months

Investors in equities recorded a loss of N1.339 trillion during the last three months (between February and April) 2021 following profit takings and low sentiment to growing concerns about the rising yields in the Fixed Income market.

 

Analysts attributed the drop in the indices to profittaking by investors, saying the trend may be sustained as investors continue to leverage the appreciation recorded in the month of January despite 2020 and Q1 earnings.

 

With uncertainties about the direction of yields in the FI market still bugging investors’ minds, the bears are likely to retain dominance in the market.

 

The yields in the fixed income market have continued to dampen investors’ interest in equities as the bearish performance in the Nigerian Exchange Limited (NGX) remained unabated.

 

Accordingly, the All-Share Index fell below the 40,000 psychological mark, declining by 6 per cent during the period to close at 39,834.42 points.

 

Available statistics to Sunday Telegraph showed that activities on the NGX which opened the trading at N22.186 trillion in market capitalisation and 42,412.66 in index at the beginning of trading on February 1, 2021, closed the month of April at N20.847 trillion and 39,834.42 index points, hence has earned a loss of about N1.339 trillion or 6 per cent during the period under review.

 

The Chief Research Officer of Investdata Consulting Limited, Ambrose Omordion, reacting to the development said: “While chart watchers and market participants await a trigger to drive the anticipated reversal of trend, these pullbacks are creating buy opportunities ahead of earnings expectation.

 

“However, let your investment plans and objectives: entry and exit strategies, guide you to survive and profit from the expected new trend. “In that way, should the full-year earnings reports and dividend news fail to impact and reverse the current trend, a big rotation in sector trends should also guide you, going into the future.”

 

To analysts at Cowry Asset Management Limited: “In the new week, we expect the local equities market to further trade southwards as investors trade cautiously amid rising fixed income yields. However, we expect investors to position in companies expected to announce good dividend payments”.

 

To analysts at Cordros Capital: “With uncertainties about the direction of yields in the FI market still  bugging investors’ minds, the bears are likely to retain dominance in the market. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.

 

“With the MPC meeting now out of the way, we expect investors’ attention to be focused on the bond auction results as they keep an eye on the movement of yields in the FI market. As the FY 2020 earnings season gradually fades away, we expect investors’ sentiment to be influenced by developments in the macroeconomic landscape and corporate actions”.

 

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