Experts urge investors to take long term position in quality stocks
Cross section of experts have urged investor in the Nigerian equity market to take long term position in quality stocks for a sound returns on investment.
Experts at Investment One research in their trade ideas for the week usually released at the beginning of every week expressed optimism in the equities market and key sectors, maintaining that taking long term positions on quality stocks rewards.”
Having said that, we advise investors to tread with caution and gradually build position in quality names for an extended investment horizon” the week’s trade guide pointed.
The analyst’s report maintained positive stance on both quality Banking and cement stocks based on sustained high interest rate regime for the banking sector as well as potential for increased government capital expenditure spending which also stands to benefit the financial institutions and the cement companies among others.
“While index performance remains susceptible to weak macro backdrop and threat of MSCI eviction of Nigerian equities, we expect market performance to be impacted by investors’ response to the new CBN’s window for investors and exporters” Investment One Research noted.
MSCI (Morgan Stanley Capital International) Index is a measurement of stock market performance in a particular area. Like other indexes, such as the Dow Jones Averages or the S&P 500, it tracks the performance of the stocks included in the index.
Meanwhile, Investment is gradually positioning to take new trend during the week to be influenced by Nigerian Bureau of Statics (NBS) to Q1 2017 Financial Service Data to be released this week. Also, the new policy by Central Bank of Nigeria (CBN) to open special forex window for investors and exporters.
At the tail end of outgone week, the CBN released a circular on the proposed opening of a special FX window for investors and exporters.
The week is positioned to expect boost in fixed income transaction as the OMO maturity of N52billion is expected to hit the system on Thursday this week.
In the capital market, MOBIL is expected to mark down for 800k dividend during the week also Daily Times recalls that NSE ASI shed -1.26 per cent or 120bps last week, as yields on FGN bonds expanded across tenors on liquidity squeeze.
At the parallel market, Naira strengthened by +6.5 per cent during the week against the USD to end the week at N385, while Brent oil price slumped to $51pb level on US shale output surge.
One of the key operational requirements for the new FX window provides for exchange rate determination between willing buyers and sellers.
This in our view has created a semblance of market and thus jettisons the previous arrangement when price points are dictated by the regulators.
However, downside risks remain from lack of policy credibility given CBN’s antecedent of interfering with market situation.
