By Nkiruka Nnorom
AFTER recording one of the worst weeks in the year, following the announcement of the winner of the presidential election last week, investment bankers have noted the high possibility of the market sustaining the negative trend this week.
They, however, reiterated that bargain hunting could engender positive moves during the week.
The bourse maintained bearish sentiment from the previous week despite the release of some impressive financials and attractive proposed dividends.
During the week, Dangote Cement Plc and Africa Prudential Plc released their respective 2018 year end results, which showed 11.87 percent and 91.10 percent revenue and post tax profit respectively for Dangote Cement and 35.28 percent and 13.89 percent gross earning and profit after tax growth respectively for African Prudential.
Despite this, the major equities gauge, the All Share Index, ASI, slid by by 2.12 percent to close at 31,827.24 points, a development operators attributed partly to the effect of the outcome of presidential election on one hand and profit taking on the other hand.
Similarly, the equities capitalisation fell by N257 billion or 2.12 percent to close at N11.869 trillion on Friday.
Reacting, analysts at Lagos based investment firm, Vetiva Capital Management said: “Given the reaction of investors to the election results last week, we highlight the possibility of negative sentiment trickling down into the market this week.
That said, we expect bargain hunting to drive positive trading as investors take up undervalued stock leading to a mixed session at week start.”
Mr. Chinenye Anyanwu, Managing Director/CEO, Dependable Securities, doubted the possibility of early return to the green zone without change of governance style by the incumbent president, Muhammadu Buhari.
Like Vetiva, he said that the market could find reprieve in the release of 2018 financial statements and the fact that the market has reached a level it would correct itself.
“The sell-off will continue until a positive sign comes from the government of the day; if there is a positive sign from the government of the day, investors will react accordingly. Not until there is such a thing, the stock market will continue to slide,” Anyanwu said.
Making a prognosis into the week, analysts at Meristem Securities stated that investor sentiment towards the banking sector, which was bearish last week could be reversed as investors take advantage of relatively cheap valuations on some of the banks, as well as positive earnings results.