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Analysts Urge Investors to Trade Cautiously, Anticipate Selloffs on Banking Stocks

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By Modupe Gbadeyanka

As the general elections draw closer, investors in the Nigerian stock market have been advised to “trade cautiously” so as not to get their fingers burnt.

Next Saturday, Nigerians will head to the polls to elect who will lead them for another four years. Also on that day, precisely February 16, 2019, they will elect representatives into the National Assembly, which comprises the Senate and the House of Representatives.

The two main contenders for the seat of President of Nigeria are Mr Muhammadu Buhari, who is seeking a second term in office under the ruling All Progressives Congress (APC), and Mr Atiku Abubakar of the opposition Peoples Democratic Party (PDP).

While Mr Buhari wants another term in office to take Nigerians to the “Next Level”, Mr Abubakar is begging to be elected President to revamp the economy and “Get Nigeria Working Again.”

As the much-talked about 2019 elections are days away, those who invest in equities in Nigeria have been warned to stay on the sidelines to watch how things go.

In their weekly report, analysts at Cowry Asset said, “In the new week, we expect the Nigerian equities market to be bearish as investors are likely to stay on the sidelines given the closeness of the presidential election. Hence, we advise cautious buying before election week.”

“Our outlook for equities in the near-to-medium term is negative, and we guide investors to trade cautiously, amidst absence of a near term positive catalyst and political jitters ahead of the upcoming 2019 elections. However, macroeconomic fundamentals remain stable and supportive of recovery in the long term,” those at Cordros Research posited.

For Afrinvest Research analysts, “In our opinion, this further confirms that investors are still on the sidelines and may only take short term positions till post-election stability is established. As we move into a new month, we maintain our bearish outlook on the market, although the earnings season could see market rally in the period.”

Analysts at Meristem Research opined that, “This week, we expect the unimpressive earnings releases in the consumer goods sector to sour sentiment towards the tickers in the sector.

“In the banking space, opportunities for further profit-taking may likely settle the banking index lower. We, however, do not rule out bargain hunting in the market as contrarian investors take a position on fundamentally justified stocks.

“In sum, we expect the market to slip further this week, as profit-taking on banking stocks and selloffs on their counterparts in the consumer goods space drag the performance of the market.”

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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