Nigerian stocks rose by 0.1% on Monday, despite election uncertainties and foreign investor caution, shooting up the return on the total stocks listed on the bourse so far this year to 6.1%, Investors King reports.
However, the Nigerian stock market still struggles to regain its pre-pandemic buoyancy, with trade remaining largely muted as foreign investors stayed away from Nigerian equities for fear that the current dollar shortage may hinder them from redeeming their investment.
The current dilemma has become more complicated with uncertainty as Nigerians go to the polls later this month. The recent electioneering uncertainties in Africa’s largest economy have put pressure on the stock market.
This is because investors are always skeptical about what might happen when there is a change in the country’s leadership. As the election date draws near, more investors will be watching the market closely to avoid any significant loss due to election-related uncertainties.
Despite these uncertainties, market breadth was positive on Monday, as 17 gainers were reported compared to 9 decliners. The top five gainers were Conoil, MRS, Chams, GSK, and Champion Breweries. Meanwhile, the top five losers were CWG, Fidelity, NAHCO, FBN Holdings, and Vitafoam.
The market capitalization advanced to N29.6 trillion, which represents a 6.1% growth so far this year. This is good news for investors, but it remains to be seen whether this upward trend will continue or not.
Investment bank United Capital said in its outlook note for this week, “We expect the depressed interest rate environment to continue to favour the equities market in line with our expectations for Q1-2023. We note that the profit-taking activities seen during the week serve as a caution to market participants as the bears may fully resume.”
The caution to market participants is that the bears may fully resume, implying that the market may fall again. The profit-taking activities seen during the week, as noted by United Capital, suggest that some investors might be exiting the market while the market is still in the positive territory.
However, trade remains largely muted, and bears may fully resume, cautioning market participants. Investors should continue to watch the market closely to avoid significant losses due to election-related uncertainties.