Wednesday 01 September 2010
- Culled from Businessday NewsThe Nigerian Stock
market has remained positive so far this week, having bounced from the six days
consecutive downward performance. Analysts say
investors buying pressure continued to dominate trading activities on the floor
of Nigerian Stock Exchange (NSE) after a lackluster performance that trailed
the passage of the Asset Management Company of Nigeria (AMCON) Bill. The AMCON is
expected to buy up the toxic asset, open up the books of the banks and thus
encourage lending. Under the harmonised bill, the toxic assets would be
exchanged for seven-year bonds or other debt instruments issued by AMCON and
guaranteed by the ministry of finance. BusinessDay learnt
that the AMCON value would be N10 billion. Analysts at Afrinvest West Africa
had attributed last week bearish trend to include profit taking, just as other
investors exited their short-term positions in anticipation of further decline
in share prices. On the other hand,
Sterling Capital attributed last week bearish outlook to several factors
including; the usual month-end sell down, forced sale by stockbrokers to enable
them repay their margin loan obligations to the banks and apprehension
concerning developments in the global economy, particularly the Euro zone.ÂQuoted equities
lost N152.84 billion in capitalisation during the week, but the NSE-ASI which
peaked this year at 28,097, after advancing by 34 percent from where it was at
the beginning of the year, has since lost some 10 percent of those gains but is
still up +21 percent for the year as of January 28, 2010. Currently, most
stock prices have bottomed out while creating opportunities for new buyers.
Market analysts posited that the new cycle would continue as more investors
take advantage of the new positive trend. We expect increased liquidity and low
interest rates to induce demand as value investors begin to position for market
recovery in view of current low prices of stocks. Buy opportunities continue to
exist for stocks with good fundamentals for medium to long term, Sterling
Capital, stated. At Cordros Capital,
the analysts were of the view that the market would continue to be more
volatile even as investors trade cautiously. Concerns about the
AMCON are expected to weigh positively on stocks in the weeks ahead. We expect
that in the coming weeks, the market will move in a direction with upward bias,
as the weeks ahead bring an array of companies second quarter reports
being released to the market.