Stock Market Expected To Rebound After Buhari’s Inauguration – Experts

By Ikenga Chronicles May 20, 2019

Stock Market Expected To Rebound After Buhari’s Inauguration – Experts

Capital market experts have said the market is expected to rebound after President Muhammadu Buhari’s inauguration on May 29, 2019, and nomination of members of his cabinet.

Analysts at Cowries Research said the Nigerian Stock Exchange (NSE) might witness a boom after the president makes public the names of his cabinet members, especially “if the ministers are perceived by investors to be market-friendly.”

However, the experts said the ongoing court cases challenging the outcome of the presidential election might have been keeping equity investors on the sidelines because they are not sure of what would eventually happen.

Meanwhile, a recently released report by NSE on domestic and foreign portfolio participation in equities trading for the first quarter in 2019, shows that equities market transactions significantly slowed when compared with the equities trades done in 1Q 2018.

This was due to the negative sentiments of the retail, domestic institutional and the foreign portfolio investors (FPIs).

The implementation of the Multi Fund Pension Structure since 2018, relatively peaceful post-elections atmosphere and reduction of the Monetary Policy Rate (MPR) to 13.50 per cent from 14.00 per cent failed to lift the market in the quarter under review.

The report indicated that the NSE All Share Index (ASI) plunged by 1.24 per cent to 31,041.42 index points in March 29, 2019 (from 31,430.50 index points in December 31, 2018).

All the sectored gauges also plummeted: the industrial, oil and gas, consumer goods, insurance and banking indices nosedived by 14.07 per cent, 13.55 per cent, 13.54 per cent, 9.67 per cent and 9.30 per cent respectively to 1,063.71 points, 261.28 points, 647.45 points,114.25 points and 361.35 points respectively in 1Q 2019.

Further analysis showed that total transactions on the nation’s stock market decreased to N420.26bn in 1Q 2019 (from N878.97bn in 1Q 2018); of which FPI transactions declined to N221.87bn (from N381.82b) while domestic transactions moderated to N198.39bn (from N497.15bn).

Breakdown of the FPI transactions in 1Q 2019, showed that foreign portfolio outflows which fell by 29.19 per cent to N124.24bn, outstripped the foreign portfolio inflows which also fell by 52.69 per cent to N97.63bn by 7.26 per cent.

Similarly, on a yearly basis, domestic institutional transactions declined by 65.29 per cent to N100.29bn in 1Q 2019 from N288.91bn in 1Q 2018, while the retail transactions dipped by 52.89 percent to N98.10bn from N208.24bn.

Source: Daily Trust