By Peter Egwuatu
THE Association of Securities Dealing Houses of Nigeria (ASHON) has attributed the downward trend in the stock market in recent times to panic sale of shares. Besides, ASHON has re-opened the call on investors to take advantage of sound professional advice from their stockbrokers before taking investment decision.
Reacting to the on-going bearish trend in the market in recent times, ASHON’s Chairman , Chief Patrick Ezeagu, said : “Many investors adopt herd instinct whereby they sell off just because others are selling.”
Ezeagu noted that two investors may not necessarily have the same motive for sale or buy order, saying this is where the need for professional investment advice from stockbrokers become compelling.
He stated that a trend analysis of corporate earnings in recent times indicate that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the movement of their share prices.
Ezeagu explained that there was nothing unusual about this as the market generally reflects the trend in the economy; hence, investors buy into the future of these companies on the expectation of higher shareholder value.
“Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decision in one second. Our Stock market is forward looking.
‘‘Investors need not be nervous. They should consult professional stockbrokers for sound investment decision. There is no basis for panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on panic sale of shares?
“Globally, stock market gauges the mood of the economy like a barometer. Our market is not a local one. Foreign investors have significant stakes because their analysis has always convinced them that our market has potential for strong Return on Investment (ROI). At the moment, core investors are awaiting a couple of things, including announcement of ministers of the Federal Republic and the Economic Team to show the clear direction of the government.
“ These are issues that are beyond the Board and Management of the Nigerian Stock Exchange, NSE but have dire consequences on investment decisions. The bearish trend has to do with the fact that the government is yet to settle down after the elections.”