By Chioma Obinagwam
The recent fall in the prices of equities on the Nigerian Stock Exchange (NSE)- the Nigerian bourse, precipitated by the COVID-19 pandemic, dwindling investors’ appetite among other factors, appear to be favourable for discerning investors to invest in the NSE.
Confiance News gathered on Friday from analysts at Afrinvest- a leading independent investment banking firm with a focus on West Africa.
“Current stock prices are attractive for bargain hunting,” it advised.
According to data mined from the weekly report of the NSE, the All-Share index, which tracks the general market movement of all listed equities on the Exchange regardless of their capitalisation, shed 355.92 basis points (bps) or 1.41 percent to settle at 24,826.75 points – the second weekly decline in three weeks.
Confiance News recalls that the 1.41 percent loss is much higher than the 0.67 percent gain it made a week earlier, thus, dragging the index year-to-date to a 7.51 percent loss.
The report, however, disclosed that of the 16 index that make up the All-Share index, 10 closed negatively, only five of them gained whereas the ASeM index, in its usual manner, closed flat.
Although Afrinvest thinks this is the best time to buy stocks because they are being sold at a cheaper rate, analysts at Cordros Capital, a leading financial services group in African Markets with a reputation for wealth creation, holds a somewhat divergent view.
Cordros Capital maintains that investors should not be carried away by the decline in the price of shares but invest in stocks that are fundamentally viable.
“In our opinion, risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to trade cautiously and seek trading opportunities in only fundamentally justified stocks,” it warned.
Meanwhile, Neimeth International Pharmaceuticals Plc, NPF Microfinance Bank and Prestige Assurance are among the top 10 stocks that declined in price in the week under review, shedding 40.08 percent, 25.13 percent and 18.57 percent respectively.
This implies that bargain hunters have access to a basket of low priced stocks.
In the new week, analysts at Afrinvest and Cordros Capital seem to agree that the equities market may not witness a rebound due to the COVID-19 pandemic and weak economic conditions.
Nevertheless, investors are expected to trade cautiously.