By Peter Egwuatu
CSL Stockbrokers Limited, a subsidiary of First City Monument Bank (FCMB) Plc has cautioned regulators in both the money and capital market to implement positive policies that would return confidence in the market. The company however predicted thatÂ the Nigerian stock marketÂ will rebound in 2010 following the gradual calm returning to the Niger Delta region as well as the rebound in global oil prices.
Speaking at the opening ceremony of a two day international investorsâ€™ conference held between Monday and Tuesday, Managing Director/CEO, CSL Stockbrokers Limited, Mr. Gboyega Balogun , who disclosed this said, at the moment investorsâ€™ confidence remains low but assured that it will increase if the investors are assured that there wont be another surprise from the banking industry.
According to him, â€œ We welcome the gradual calm returning to the Niger delta as well as the rebound in Global oil prices. All these of course bode well for the general economy as well as the capital market though we urge some level of caution.â€
On the capital market, he said , â€œour short term outlook remains moderate. The NSEâ€™s all share index is still dominated by the banking sector, and we feel investorsâ€™ confidence will remain low until they are assured that there wonâ€™t be any further significant negative surprises in the banking sector.
â€œConsequently, in the very near term, we are underweight Equities, especially the banking sector. We are overweight Consumers, Foods and Beverages, and are neutral on Cement, Construction and Industrials.
Beyond the near term, we are positive for the first half of 2010. We would recommend that investors begin to look for select buying opportunities through fourth quarter 2009 in anticipation of a rebound in 2010.Â We expect a relatively better and stronger first quarterÂ 2010, both in corporate reporting and market performance.
We expect the banking sector to lead the way as the banks return to profitability after the one-off loan loss provisioning that have characterized the second half of 2009.â€
Meanwhile, an analyst with the CSL Stockbrokers Limited, Mr. Gregory Kronsten, has recommended for a diversification of the countryâ€™s resource base, whileÂ recommending the use of FGN bonds on supply factors to meeting its infrastrutural needs.
According to him , â€œ A combination of conservative issuance of bonds and strong demand from all investors ahead of the mandatory common year end for banks in December 2009 is recommended.â€
On equities market, he said, â€œWe are more reserved on equities. We urge caution on bank stocks, which dominate the index, until we can see the impact of tougher regulation in early 2010.Non-bank stocks have defensive qualities but many are now close to fair valueâ€
He noted that because the banks dominate the Nigerian Stock Exchange(NSE), their prospects drive its view of index direction.
According to him, â€œ We target a modest fourth quarter, with index ending the year at 22,500. We expect next year and year after to be much better, with the NSE All Share Index (ASI) rising to 30,000 at the end of 2010 and up to 37,500 in 2011.â€