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EQUITIES: Bearish run to ease as investors take position

By Babajide Komolafe & Michael Eboh

The declining trend in the Nigerian Stock Exchange (NSE) is expected to ease slightly this week, as investors take advantage of the decline recorded over the past days to take position in certain stocks that have recorded steady decline in the share prices.

Last week, the value of investments on the NSE dropped by N177.73 billion, as the value of listed equities, represented by the market capitalisation, shed 2.8 per cent to N6.138 trillion from N6.273 trillion at which it opened.

The All-share index, another performance indicator, also shed 2.8 per cent, dropping by 730.68 basis points to 25,422.79 points from 26,153.47 points at which it opened the week.

Last week, 79 companies recorded price losses, compared to 18 companies with price gains.
Last week, activity in the NSE was driven by concerns over the stability of the Nigerian capital market, especially with the uncertainty in the global financial landscape.

Experts blame the decline in the market to the recently released guidelines for margin lending by the regulatory authorities and movement of funds out of the Nigerian market.

They are of the opinion that sell-offs by investors is mainly responsible for the decline in the market, especially as investors move their funds to other investment vehicles, particularly, in fixed income securities.

Also, the decline has been blamed on the crisis in the European Union, which experts say is likely to spread to other countries of the world if it is not nipped in the bud.
According to the experts, several foreign portfolio investments in the Nigerian capital market originates from the Eurozone. As a result, local market watchers have started to link the current doldrums in the Nigerian Stock Market to massive sales by foreign investors adversely affected by the situation in Europe .

It is expected that activity in the market would be driven, this week, by renewed interest in the market, as investors take advantage of the decline recorded in the past couple of days to invest in low-priced stocks.


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