Economics

Analysts cautious over Nigeria market rebound

nigeriastockmktInvestors at the Nigerian Stock Exchange (NSE) have been advised to tread cautiously, as market stability remains uncertain.

Detola Olukorede, head, equity research team at Investment Option, a portfolio management company, said that investors should do “analytic trading instead of speculative trading.”

Mr. Olukorede said that as the market is currently witnessing unstable rebound, “it is advisable to buy when stocks are undervalued, and sell the moment they are overvalued.” Meanwhile, the rebound witnessed at the NSE two weeks ago plunged on Tuesday. The Exchange’s market capitalisation lost N17 billion on Monday’s figure of N6.194 trillion, to close at N6.177 trillion, a 0.27 percent decrease.

The All-Share Index was also down by 0.27 percent, shedding 68.18 units from the 25,278.23 basis points recorded on Monday, to close yesterday at 25,210.05 basis points. A total of 30 stocks appreciated in price on Tuesday, while 28 stocks depreciated.

Banks lead

Commenting on yesterday’s trading, finance analysts at Proshare Nigeria Limited, an investment advisory firm, said the stock market recorded losses because of the activities of some profit takers.

“Equity market records red position, as profiteering sets in on the advantage of weak bargain position,” they said, adding that investors should do cautious trading.

The banking subsector was the most active on Tuesday, leading market transaction with 217.45 million units valued at N1.92 billion, as against the 180.02 million units valued at N1.59 billion recorded on Monday.

The volume recorded in the sector was driven by transaction in the shares of First Bank, Guaranty Trust Bank, FinBank, and United Bank for Africa (UBA). The total volume of 129.75 million units, valued at N1.55 billion, traded in the shares of the four stocks accounted for 35.90 percent of the entire market volume.

Approved Bonds

Meanwhile, the Stock Exchange, in a statement signed by its spokesperson, Sola Oni, on Tuesday, said the NSE’s Council, through its Quotation Committee, approved applications for listing worth N38.6 billion for three companies.

The council endorsed UBA Plc’s application for approval/listing for subscription of N20 billion Fixed Rate Subordinate Unsecured Notes (Series 1) due 2017 at N1000. The issue is under a N400 billion Debt Issuance Programme of the bank. The joint stockbrokers to the issue are Afrinvest (West Africa) Limited and UBA Stockbrokers Limited, while the joint Issuing Houses/Book Runners are UBA Capital Limited, Stanbic IBTC Bank Plc, BGL Plc, and Greenwich Trust Limited.

The NSE approved the Nigeria Police Force (NPF) Microfinance Bank Plc’s application for listing by Introduction of 2.286 billion Ordinary Shares of 50 kobo each at N1.50 per share. The bank was established in 1993 as NPF Community Bank Limited and became a public limited company in 2006.

“In 2008, it had earlier recorded a successful Private Placement/Rights Issue. It was introduced by Lead Capital Securities Limited,” the statement said.

NEM Insurance Plc’s application for approval for acquisition of Lombart Insurance Company Limited and listing on the Exchange of resultant 303.508 million Ordinary Shares of 50 kobo each was also endorsed. The listing was introduced by Marinpex Finance and Investment Company Limited.

“The ongoing request for capital raising is an attestation to the fact that companies would continue to take advantage of opportunities in the Nigerian capital market to expand their operations,” the Exchange said.

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