Experts predict positive stock market in Q2
SOME financial experts on Wednesday expressed optimisim that the Nigerian stock market would experience a positive turnaround and increased liquidity in the second quarter.
They told the News Agency of Nigeria (NAN) in Lagos that the Federal Government sustained economic revamping measures would impact positively in the market this quarter.
Dr Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University Keffi, said that the market would witness enhanced liquidity in this quarter with the appreciation of the naira following the Central Bank of Nigeria (CBN) sustained interventions.
Uwaleke said that lower headline inflation, the expected passage of the 2017 budget would all combine to boost liquidity in the stock market.
“For the equities market, the Year-to-Date return currently stands at a negative 5.96 per cent. However, for Q2 of 2017, I expect a positive turnaround in the fortunes of the stock market, he stated.
Uwaleke said that out of 25 companies that have made their audited financial results public 13 of them reported increased earnings noting that the financial performance of other listed firms would be known this quarter.
Mr Sewa Wusu, Head of Research, SCM Capital Ltd., said that the market was still exhibiting negative sentiments based on the current weak macroeconomic environment.
Wusu stated that the outlook for the second quarter looked positive in view of the recent economic drive of government to revamp the economy.
He said that the economic environment seems to be responding to the current move by the apex bank to pump more foreign exchange into the system.
Wusu added that the volatility in the foreign exchange markets was easing, noting that planned government spending on key infrastructures were expected to stimulate economic activities in this quarter.
“What this means is that risk tolerant investors should seize the current low valuations to position ahead as market begins to respond in the near term.
As a result I see a positive outlook hinged on economic revamping measures,” Wusu stated.
But Mr Ambrose Omordion, the Chief Operating Officer, InvestData Ltd., said that the market and economic outlook for the second quarter were dicey and unstable due to oscillating crude oil price at the international market.
Omordion added that increasing global economic uncertainty from the fiscal and monetary authorities would dictate market direction in the quarter.
He, however, said that expectations of positive figures for March Purchasing Managers Index (PMI) and the Gross Domestic Product (GDP) to confirm that the economy was on the path of recovery would likely drive activity.
According to him, traders and investors who understand the operations of the stock market should take advantage of the opportunity to position in some sectors for medium to long-term gains in the banking, insurance, agribusiness and service sectors.