September 10, 2018

Lingering jitters in global markets expose NSE to more sell-offs

Lingering jitters in global markets expose NSE to more sell-offs


By Nkiruka Nnorom

The Nigerian stock market may face further sell-offs in the coming weeks following the lingering crisis in the global economic space, investment experts have said.


According to them, the ongoing protectionist sentiments among large economies pressured global markets during the week, as investors awaited the United States’ decision regarding the proposed additional tariffs on Chinese goods worth US$200.0 billion.

“Although the White House was eventually silent as the deadline for public comment passed on Thursday, China reiterated its plans to retaliate. Also, the US continued trade talks with Canada following the US–Mexico trade deal announced in the prior week, with President Trump suggesting the end of North American Free Trade Agreement, NAFTA, if negotiations are unsuccessful,” explained Afrinvest Securities in its weekly report.

Based on these developments, investor sentiment across global equities markets was largely bearish with the Nigerian Stock Exchange, NSE’s All Share Index, ASI, following suit with a decline of 2.33 percent to 34,037.91 points at the end of the week.

Also, investors lost N297 billion in value with the market capitalisation of all listed equities dropping to N12.426 trillion from N12.722 trillion the previous week.

Analysts at Cordros Capital in their outlook for this week said: “Our outlook for equities in the near-to-medium term is negative, owing to the absence of a near term positive catalyst and lingering jitters across the global space.”

In their own projection, analysts at Cowry Asset Management said: “We expect the NSE ASI to close negative as we do not see any event that will provide support amid sell-offs by investors, especially the Foreign Portfolio Investors, FPIs.”

They, however, said that the sell-offs would present buy opportunity as shares become more undervalued. They also urge investors to hunt for companies with potentially high dividend yields and have recorded increased earnings as at half year (H1) 2018.