Stock market indices hit 10tr mark, surge by N760 billion in three days
CIS boss, others predict market recovery, woo Investors in the Nigerian Stock Exchange (NSE), last week, had cause to heave a sigh of relief, as hopes reigned in the nation’s bourse with a significant surge in market capitalisation by N760 billion in three trading days.
Indeed, expectations that the new foreign exchange regime, if well implemented, would trigger economic activities, which would ultimately reflect on the stock market was evident at the close of trading last week, as indices soared significantly by 7.6 per cent in just three days.
Specifically, market capitalisation of listed equities, which stood at N9, 284 at close of trading last week Tuesday, rose by N760 billion billion or 7.6 per cent† to N10.04 trillion by Friday.
Similarly, the All-Share Index, which opened the day at 27, 891.96 rose by 2213.22 points to close at†29,247.27.
Meanwhile, capital market stockbrokers have re-assured investors that the NSE has potential to generate strong Return On Investment (ROI), urging them to leverage the current low prices of shares to increase their portfolios.
The President, Chartered Institute of Stockbrokers and Chairman of the Council, Oluwaseyi Abe, who explained that many of the stocks are trading below their intrinsic values, noted that ëthe coast was already clearí for investors to shore-up their holdings with the current rebound witnessed in the market.
“ It is only normal for the market to swing upward and downward because that is what makes a market. It is absolutely normal. In any case, the direction of the market at any given time is the reflection of the economy and it’s been known that the economy has not been doing well lately. So I feel it is even the best time to invest in the capital market because the economy is now on the steady path of rebound,” Abe said.
Corroborating his view, the Institute’s First Vice President, Dapo Adekoje assured investors that uncertainty, which characterised the investment climate, would fizzle out in a near future.
According to him, the Federal Government’s policy on the economic direction is becoming clearer, adding that the international community has respect for the President who has been waging war against corruption in Nigeria.
Adekoje explained that the International Monetary Fund (IMF) had endorsed the new policy of the Central Bank of Nigeria on the foreign exchange, stressing that there are strong indications that the new development would enhance efficiency in the management of the exchange rate of the Naira with its positive impact on the capital market.
The Managing Director of Network Capital, Ropo Dada noted that one of the main reasons why foreign investors were leaving was the controversial exchange rate of the Naira to convertible currencies, noting that the market has become the toast of foreign investors with the new development.
The Managing Director of GTI Securities Limited, Amos Aledare explained that the floating of the Naira will see the official rate gravitate more towards the parallel market rate before finding its bearing, since the rate will now be determined by market forces (demand and supply).
With this, he noted that this would help to eliminate the incentive to hoard the dollar, which will subsequently increase the dollar supply even from Nigerians.
According to him, this would encouraging foreign investors and local institutional investors like PFA’s who have shown considerable apathy for equities investments as a result of the high volatility created by the exodus of foreign portfolio investors to have the impetus to also take advantage of the opportunities in the market considering that most stocks that fit their stringent investment criteria’s are trading at considerable discounts.