Economy
Key Equities Investment Strategy to Consider For Optimal Profit
By Dipo Olowookere
Trading in stocks can be risky, but those who understand the market very well still make a lot of money from the ‘volatile investment.’
Knowing what equity to buy and when to sell are very key tools retail investors must be armed with or else, they will see the market as unprofitable or a scam as some people in Nigeria have insinuated because of the 2018 crisis.
As the country heads to the polls next year, governance will certainly come to a close in the third quarter of next year and foreign investors will want to quickly cash in on their investments because of fear of the unknown.
For analysts at Cowry Asset, equities investment strategy this year would be informed by macroeconomic, valuation as well as political themes.
The macroeconomic environment is expected to provide the main support for local equities in 2018 as market players anticipate further policy harmonization between monetary and fiscal authorities especially with regards to moderation of interest rates, ensuring general price level and foreign exchange stability as well as greater diversification of economic output.
“We therefore recommend a broad-based stock selection strategy to include picks from the banking, consumer goods, building materials as well as oil and gas sectors which should also provide ample portfolio diversification.
“With regards to portfolio re-balancing, we anticipate that a likely downward adjustment of interest rates should lead to the normalization of the yield curve.
“Hence, we expect portfolio managers of fixed income instruments may want to switch from holding, or go short, their short-term bonds or treasury bills to increasing the duration of their portfolios by going long the long-term bonds; or better still, they could increase investments in undervalued equities,” Cowry Asset said.
Given the positive impact of an expected improvement macroeconomic environment on the bottom line of businesses, there is an anticipation of a boost in earnings yield to investors as stocks remain undervalued in the short term.
Also, the relatively cheap valuation of the equities market, coupled with sustained stability in the foreign exchange market, therefore readily positions it for bargain-hunting institutional and retail investors.
Furthermore, the political discussions bordering on minimum wage increase as well as deregulation/ increase in petrol pump price could have positive, howbeit limited, outcomes on the stock market.
It is expected that, given the closeness of upcoming electioneering season, the proposed increase in minimum wage around the last quarter of the year is not expected to so much result in hike in inflation rate in 2018 as the increment should be largely counterbalanced by increased food supply due, in part, to the harvest season.
Also, the cost push inflation element, which hitherto had been the main driver of inflation, is expected to be further subdued. This will be good for equities in the consumer goods space as purchasing power is expected to improve.
Federal Government is not expected to increase the pump price of petrol until after the February 2019 elections; hence, prices of petroleum marketing stocks are expected to continue to trade around current levels in 2018.
However, 2018 would be an ideal time for informed bargain hunters to swoop down on shares of major names in the downstream sector at current valuations as their profit margins are expected to improve in the event of an increase in pump prices.
By Modupe Gbadeyanka
The federal government has been asked by the Nigerian Bar Association (NBA) to suspend the implementation of the controversial tax laws.
In a reaction to the tax reform acts, the president of the group, Mr Afam Osigwe (SAN), the suspension of the laws would allow for a proper investigation into allegations of alterations in the gazetted and harmonised copies.
A member of the House of Representatives, Mr Abdussamad Dasuki, alleged that some parts of the laws passed by the parliament were different from the gazetted copy.
To address the issues raised, the NBA said it is “imperative that a comprehensive, open, and transparent investigation be conducted to clarify the circumstances surrounding the enactment of the laws and to restore public confidence in the legislative process.”
“Until these issues are fully examined and resolved, all plans for the implementation of the Tax Reform Acts should be immediately suspended,” the association declared.
It noted that the controversies “raise grave concerns about the integrity, transparency, and credibility of Nigeria’s legislative process.”
“These developments strike at the very heart of constitutional governance and call into question the procedural sanctity that must attend lawmaking in a democratic society,” it noted.
“Legal and policy uncertainty of this magnitude has far-reaching consequences. It unsettles the business environment, erodes investor confidence, and creates unpredictability for individuals, businesses, and institutions required to comply with the law. Such uncertainty is inimical to economic stability and should have no place in a system governed by the rule of law.
“Nigeria’s constitutional democracy demands that laws, especially those with profound economic and social implications, emerge from processes that are transparent, accountable, and beyond reproach. Anything short of this undermines public trust and weakens the foundation upon which lawful governance rests.
“We therefore call on all relevant authorities to act swiftly and responsibly in addressing this controversy, in the overriding interest of constitutional order, economic stability, and the preservation of the rule of law,” the organisation stated.
By Adedapo Adesanya
Demand for hot stocks, including MRS Oil Plc, buoyed the NASD Over-the-Counter (OTC) Securities Exchange by 0.52 per cent on Tuesday, December 23.
The energy company was one of the three price gainers for the session as it chalked up N19.69 to sell at N216.59 per share versus the previous day’s value of N196.90 per share.
Further, FrieslandCampina Wamco Nigeria Plc gained N2.95 to close at N56.75 per unit versus N53.80 per unit and Golden Capital Plc appreciated by 84 Kobo to N9.29 per share from Monday’s N8.45 per share.
Consequently, the market capitalisation went up by N10.95 billion to N2.125 trillion from N2.125 trillion and the NASD Unlisted Security Index (NSI) rose by 18.31 points to 3,570.37 points from 3,552.06 points.
Yesterday, the NASD bourse recorded a price loser, the Central Securities Clearing System Plc (CSCS), which gave up 17 Kobo to close at N33.70 per unit against the previous trading value of N33.87 per unit.
The volume of securities traded at the session went down by 97.6 per cent to 297,902 units from the previous day’s 12.6 million units, the value of securities decreased by 98.5 per cent to N10.5 million from N713.6 million, and the number of deals remained flat at 32 deals.
By value, Infrastructure Credit Guarantee Company (InfraCredit) Plc ended as the most actively traded stock on a year-to-date basis with 5.8 billion units exchanged for N16.4 billion. This was followed by Okitipupa Plc, which traded 178.9 million units valued at N9.5 billion, and MRS Oil Plc with 36.1 million units worth N4.9 billion.
In terms of volume, also on a year-to-date basis, InfraCredit Plc led the chart with a turnover of 5.8 billion units traded for N16.4 billion. Industrial and General Insurance (IGI) Plc ranked second with 1.2 billion units sold for N420.7 million, while Impresit Bakolori Plc followed with the sale of 536.9 million units valued at N524.9 million.
By Dipo Olowookere
It was another bullish trading session for the Nigerian Exchange (NGX) Limited as it closed higher by 0.59 per cent on Tuesday.
The market further rallied due to continued interest in large and mid-cap stocks on the exchange by investors rebalancing their portfolios for the year-end.
Yesterday, Aluminium Extrusion sustained its upward trajectory after it further appreciated by 9.96 per cent to N14.90, as Austin Laz gained 9.81 per cent to close at N2.91, Custodian Investment improved by 9.69 per cent to N38.50, and First Holdco soared by 9.35 per cent to N50.30.
Conversely, Royal Exchange declined by 7.22 per cent to N1.80, Champion Breweries shrank by 6.57 per cent to N15.65, NASCON lost 5.36 per cent to trade at N105.05, Sovereign Trust Insurance depreciated by 5.28 per cent to N3.77, and Japaul went down by 4.51 per cent to N2.33.
At the close of business, 29 shares ended on the gainers’ table and 27 shares finished on the losers’ log, representing a positive market breadth index and bullish investor sentiment.
This raised the All-Share Index (ASI) by 895.06 points to 153,354.13 points from 152,459.07 points and lifted the market capitalisation by N579 billion to N97.772 trillion from the previous day’s N97.193 trillion.
VFD Group finished the day as the busiest stock after it recorded a turnover of 192.0 million units worth N2.1 billion, GTCO exchanged 63.5 million units valued at N5.6 billion, Access Holdings traded 49.8 million units for N1.0 billion, First Holdco sold 45.8 million units valued at N2.3 billion, and Secure Electronic Technology transacted 38.3 million units worth N28.4 million.
In all, market participants bought and sold 677.4 million units valued at N20.8 billion in 27,589 deals compared with the 451.5 million units worth N13.0 billion traded in 33,327 deals on Monday, showing an improvement in the trading volume and value by 50.03 per cent and 60.00 per cent apiece, and a shortfall in the number of deals by 17.22 per cent.
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