The Nigerian Stock Market began 2018 on a high, recording over 17% in the first few weeks. This was on the back of strong optimism of sustained recovery and growth which was expected in global economies. For Nigeria in particular, many variables were in our favours such as Rising Crude Oil prices, Accruing FX reserves and relatively stable FX.
Despite these favourable conditions which still exist, Year to date (YTD), the Stock Market has performed poorly recording a negative. The first reason for
this decline was the US double rate hike in March and June. The second is the political risk associated with the upcoming Nigerian elections in 2019. All these has resulted in foreign portfolio investors exiting the country.
Considering the bearish state of the market, most investors have become very cautious. According to Warren Buffet, A seasoned Investor who is among the Top 10 richest men in the world, this is the time to start investing in stocks. It is a known fact that the best time to invest is when stock prices are declining. But now the question is, how far will the Nigerian Stock Market fall?
For now, it is almost uncertain to say when the market will stop its bearish trend and start its recovery, due to the many uncertainties that exist and are predicted
to come globally and domestically. Some of these uncertainties include Crude Oil price fluctuations, Trade war initiated by the US, Expected increase in US rates, Nigeria’s Elections, etc.
However, we advise that investors can begin investing in stocks bit by bit, especially those with strong fundamentals. Some of these stocks have declined by over 50% which makes them very attractive. Spreading your investments in such stocks at different low prices reduces your average entry price, increasing your profit potential once it rebounds.
In 2019, our expectation for the performance of the stock market is bullish. We believe as the political situation of the country gets clearer and shows signs of stability the market will experience a rebound. In addition to this, we believe crude Oil prices within this period will not fall below $60 which is positive for the country.
Below are the changes of selected stocks so far in the year….
GTI CAPITAL RESEARCH