Investors clamour for low priced stocks ahead of predicted market rebound
Discerning investors desirous to take advantage of the currently low-priced equities have invaded the Nigerian stock market ahead of second quarter of next year, when market analysts anticipate a rebound.
Already, the development has triggered a 0.05 per cent upward swing in the All-Share Index of the Nigerian Stock Exchange (NSE) from all time low of 27,385.69 to 27,631.05.
The emerging bullish profile of the market persisted till Monday, resulting in market capitalisation of listed equities rising further by N69 billion or 0.7 per cent from N9,500 trillion recorded on Friday to N9,569 trillion.
But the nascent positive rally was disrupted by the resurgence of recalcitrant bears on Tuesday, pulling down All Share Index to 27,533.03 and capitalisation to N9.466 trillion.
This is against the backdrop of market watchers’ and speculators’ earlier insistence that the bearish trend may continue till second quarter of 2016, pointing at the lingering absence of government policy direction for the economy, which is making many investors to sit on the fence.
However, veteran investors who are adept in the act of doing business in the market have posited that there is glimmering hope of rebound sooner than majority of people are expecting.
According to them, since many stocks have hit rock bottom price and trading below book value, this was the right time to stake investment in the market.
Pa Daniel Ojiakor, a shareholder and a seasoned equities investor, observed that the right time to come into the market to invest is when there are low priced stocks such as at present ahead of expected rebounds.
He explained that in the 1970s, he made a fortune out of the low-priced equities belonging to quoted flourmills in the country.
According to him, at that time, government banned the importation of wheat used in producing bread. The ban made the share prices of flourmills in the country to plummet to all time low.
“I took advantage of the rock bottom prices of the shares to acquire them through the Nigerian Stock Exchange. When the ban placed on the importation of wheat was subsequently lifted, the share prices of flourmills skyrocketed and this gave me opportunity to make huge profits from the shares.
“Now. When you take a look at the market, there are a lot of low priced equities. No one wants to buy now, but this is the time to buy, especially when you take note of what the government is planning to do to enhance the economy and to boost activities in the capital market.
For example, a proposed law is underway to compel government Ministries, Departments and Agencies (MDA’s) to patronise local manufacturers and indigenous companies in the procurement of goods and services as a way to curb the present huge job exports, cut down overwhelming unemployment levels and save the economy from collapse.
The Local Industry Patronage Bill 2015, which has passed first reading at the Senate, also seeks to prohibit the exclusion of locally produced goods in the procurement process. If this comes to reality, it will boost the fortunes of indigenous listed firms that are comatose now.
I gathered also that the government would soon introduce infrastructure fund in the capital market. All these are measures that will soon enhance activities in the market. Wise investors always take advantage of opportunities early before others start rushing in,” he revealed.
Corroborating Ojiakor’s views, a source close to the Nigerian Stock Exchange noted that “to some, this should be the greatest wealth creation moment in the capital market.”
Alluding to what Warren Buffet would have done if playing in this market, the source added :“As Warren Buffett is fond of saying, when the mood of the crowd is at its darkest, that’s the time to buy; when the masses are in a trading frenzy, run for the exits.”
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