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Experts urge investors to expand portfolio via high-value stocks

By Helen Oji
23 May 2022   |   2:12 am
Stock market investors have been urged to increase their participation in the market by identifying and patronising stocks of companies with intrinsic value especially at this dividend season.

Capital market. Photo: SHUTTERSTOCK

Stock market investors have been urged to increase their participation in the market by identifying and patronising stocks of companies with intrinsic value especially at this dividend season.

The capital market analysts argued that despite the downturn that pervaded the nation’s capital market in the past few years, there is a need for investors to leverage the current low prices of stocks and expand their portfolio for future capital appreciation.

Amid uncertainties in the global economy and rising insecurity in the country, the nation’s stock market, after getting to a rock-bottom low for several years, recorded an upbeat rally as the all-share index (ASI), which measures the performance of listed equities crossed 53,000 mark to hit a 14-year high for the first time since 2008, while the market capitalisation soared significantly by N5.4 trillion from the beginning of the year.

Chief Operating Officer of InvestData Securities Limited, Ambrose Omordion, stressed the need for retail investors to increase their portfolios and take positions for future gains.

He also advised that investors should not panic but increase their stake inequities with intrinsic value, especially during this season when dividend payment is ongoing.

According to him, with more income investors taking positions in value and dividend-paying stocks, it is expected that the continued mixed direction of the fixed income market yields and TB rates may continue supporting the flow of funds into the stock market

“The nation’s soaring inflation is a potent threat to the fixed income market and investment yields, which should be an indication that more funds may likely flow into the equity space as institutional investors balance their portfolios.

“Also, expect repositioning to continue, while profit-taking will reduce on the strength of expected payouts and earnings surprises. However, we would like to reiterate that investors should not panic but go for equities with intrinsic value, especially during this season when dividend payment is ongoing.

“We expect the bulls to return an increasing position-taking ahead of Presco’s full-year result expected to hit the market on Tuesday, and portfolio rotations as market players digest the macro-economic data and Q1 corporate earnings released, ahead of March year-end 2022 audited financials with dividend announcements to support uptrend in the new month amid the rebound in oil prices,” he said.

The Head of Research, FSL Securities, Victor Chiazor, said the bullish run in the market, which was triggered by the year-end results, dividends and the impressive first-quarter results by the quoted companies will most likely begin to ease in June.

However, he expressed the hope that the half-year result would trigger another round of buying interest, especially for stocks that pay an interim dividend.

Therefore, he urged investors to take the position and leverage the low prices for more capital appreciation in the near future.
Also, the Managing Director of Highcap Securities, Imafidon Adonri stressed the need for investors to increase their participation in the market and stimulate the market for a sustainable rebound and increased stability