Mr. Bismarck Rewane,  MD, Financial Derivatives Limited

Goddy Egene
Some stock market analysts have cut their growth projection for the Nigerian equities market for the current financial year, following the 4.2 per cent growth recorded in the first half (H1) of the year.

Given the forecast of 13.3 and 14 per cent growth analysts projected in the beginning of the year, H1 performance would have been about 6.5 per cent.

However, the market returned 4.2 per cent, indicating that meeting the projected 14 per cent would be difficult; also considering the fact the market has in most times performed poorly in the second half (H2).

Before now, analysts at FSDH Securities Limited had said the market would close the year with a growth of 13.3 per cent, while those at Meristem Securities Limited (MSL) predicted 13.5 per cent. Similarly, analysts at FBN Capital envisaged a growth of 14 per cent.
But given the 4.2 per cent, analysts at MSL have revised their projection from 13.5 per cent to 8.26 per cent.

“We have revised our 2012 full year forecast return on the NSE All-Share Index to 8.26 per cent, given our view of macro-drivers and continued negative sentiment towards local equities.

“After a 4.2 return on the NSE-ASI in H1 (driven by 4.59 per cent return in Q2), we anticipate one more bullish quarter in the second half in line with historical trend,” the analysts said in a document made available to THISDAY last Monday.

Apparently supporting the review of the projections by some of the analysts, the Managing Director/Chief Executive of Financial Derivatives Limited, Mr. Bismarck Rewane, disclosed last week that historically, the NSE index had not done well in the H2.

According to him, average H1 return between 1986 and 2011 was 16.9 per cent while average H2 return was 7.5 per cent. Between 2008 and 2011, market gained 1.15 per cent in the H1 of the year while H2 negative 21.4 per cent per cent.

“See-sawing will continue in July with policy paralysis still keeping out retail investors, while downward trend will continue although at a lower rate. However, a trend reversal should begin from mid-July.

“Results from the banking sector will stimulate a short bullish run. Naira depreciation and persistent inflationary pressure means interest rate will remain high. We expect a positive return between two and three per cent for July,” Rewane added.