Bearish sentiments to persist in equities market as elections draw close

Bearish sentiments to persist in equities market as elections draw close

The bearish performance at the equities market, driven by negative investor sentiments, is expected to continue throughout the month of September on growing uncertainties surrounding the upcoming 2019 general election, according to market analysts.

Financial Derivatives Company says investors’ fatigue will continue as political uncertainty continues to grow, projecting a growing preference in debt capital market (DCM) to equity capital market (ECM) widens.

The economic think tank also sees an increase in foreign portfolio investment outflows, while opining that expected increase in US Fed rate would further impose pressure on performance.

A review of the Nigerian stock market in August in comparison with South African and Ghanaian markets showed Nigeria was the worst performing amongst the three with a year-to-date loss of 8.88 percent as at the end of August 2018.

The Johannesburg Stock Exchange had a year-to-date loss of 1.85 percent as at August ending while Ghana’s Stock Exchange CI closed with a year-to-date gain of 7.86 percent for the same period.

In the month of August 31, the NSE recorded a net FPI outflow of N38 billion with only five days that closed positive while 16 trading days closed negative.

Average volume of trade was 16 percent down to 257 million units while the average value of transactions was 5.72 percent down to N3.13 billion.

Only 17 stocks appreciated in price in the course of the month, 82 stocks lost, while 69 remained neutral.

Although all sub-sectors closed in negative territory, the banking sector recorded the highest loss of 8.64 percent. The poor performance of the sector can be attributed to Skye Bank (-13%), Fidelity (-17%), UBA (-16%)

The insurance index lost the least closing the month 5.99 percent lower than it opened driven by Universal insurance (-20%), Continental reinsurance (-19%), Cornerstone insurance (-17%)

Speaking on the performance of the insurance sector in light of the recent recapitalization introduced by the National Insurance Commission (NAICOM), Andy Tsaku, an equities trader at Kapital Care Securities said “we are beginning to see a lot of activity around insurance stocks, but quite a number of insurance stocks apart from just a few are trading below 50 kobo levels.”He said “Going forward, if they are intending to raise capital in order to ensure that they exist at profitable levels and to also align with regulatory requirements, it is very likely that they will tow the lines of trying to do private placing so that they can raise monies in order to […]

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