Stockrokers have urged investors to take advantage of low prices of shares to increase their portfolios. Speaking under the aegis of Association of Stockbroking Houses of Nigeria (ASHON), they said the ongoing downswing in stock market will be short -lived because market fundamentals remain strong. According to them, shares of many listed companies are undervalued, selling below their intrinsic values, saying there can be no better time to beef up portfolios in anticipation of superior return on investment (ROI).
The stock market has witnessed a consistent bear run, leading to a year—to-date decline of 7.5 per cent as at Wednesday.
However, ASHON, in statement signed by its chairman, Chief Patrick Ezeagu and General Secretary, Mr. Sam Onukwue said investors should see the bearish period as entry opportunity.
Realising the negative impact the volatile polity is having on the market, ASHON said: “For the umpteenth time, we strongly appeal to the political class that rather than indulge in unwholesome activities, actions, attitudes and destructive utterances, they should support all efforts aimed at creating the much-needed enabling environment for accelerated economic growth and development .”
According to association, the unguarded activities and unrestrained utterances of our politicians are heating up the polity with dire consequences on the economy as a whole and the capital market in particular.
“Perhaps we may remind the political class that uncertainties and all sorts of insecurities that currently pervade our country affect investors’ sentiments, asset valuations, market and country risk profile and portfolio allocation decisions. In recent times, trading statistics on the securities markets in Nigeria have been reflecting investors’ apathy to unprecedented level of tension that portends likely breakdown of law and order in the 2019 general elections,” they said.
ASHON explained that it is an unassailable investor-behaviour that bad news trigger market panic and investors over react to such news, adding that innocent investors watch helplessly as their investments are plundered by the bearish market exacerbated by prevailing uncertainties in the polity created by the political class.
“As the country’s economic barometers, the securities markets in Nigeria have continued to reflect investors’ apprehensions to instability in the political and economic landscape through all their indices. This has largely accounted for the inability of our market to fully recover from the effects of the 2008 financial crisis , notwithstanding the efforts made by the regulators and operators to fully revive the market. There is clear and present danger if the trend continues,” it said.
The stockbrokers said foreign portfolio investors and their indigenous counterparts have embarked on massive sell down of shares and other financial instruments with attendant effect of gross erosion of values despite stellar performances of many listed securities.