Experts urge investors to patronise service stocks, reduce forex exposure
Stock market investors have been urged to identify and patronise stocks of companies that render essential services with less foreign exchange exposure.
The capital market analysts, who spoke with The Guardian in a telephone interview, noted that despite the persistent lull in the nation’s capital market, investors should leverage the current low prices of stocks to expand their portfolio.
For instance, the Chief Operating Officer of InvestData Securities Limited, Ambrose Omordion, who stressed the need for retail investors to increase their portfolio and take position for future gains, however advised that investors to buy stocks of companies that renders essential services and produces house hold goods.
“Investors should look out for; not only companies that have less forex exposure but also firms that their services are essential and can generate quick money from sales.
Take for instance, Nestle Foods, because of the nature of their products cannot go down.
“Even if they increase their prices, because their products are essential, the product will still attract much patronage from consumers and their bottom-line will continue to increase. The banking stocks are also good because despite that they are exposed to forex, they also charges for transactions to increase their profit.
“Again, the agric sector is another good sector to invest in at this time because government is subsidizing some of their products to boost backward integration. These are the sectors that would drive this economy in a near future and investors should increase their stake to reap future gains.”
Also, the Managing Director of Highcap Securities, Imafidon Adonri, advised investors to identify companies that have potentials of benefitting from new economic policies such as the agro allied firms before buying the stocks.
According to him, the stocks of such companies stand a chance of yielding good returns in the near future.
Adonri explained that investors needed to increase their participation in the market increase the capitalization and stimulate the market for a rebound, adding that the prevailing bad time facing the market will not last long.
“Currently, penny stocks are good but I advice investors to look at the direction of the Nigerian economy. They should identify firms that can benefit from new policies that can drive the economy. These companies are both large and small companies,” he added.
The Chief Executive Officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, had advised investors to take advantage of the low prices of equities and invest in the market.
“Although many anticipate volatility through the first half of the year, some stock prices are at their lowest since the May 2013 sell-off, and some are below book value, thus, presenting domestic investors with no currency risk, an opportunity for cautious long-term investing,” he said.”
We expect that as the year progresses, with no or low levels of violence, a tighter grip on the security situation in north-eastern Nigeria, and a more certain macroeconomic outlook for oil prices, interest rates and the naira, the market’s attractiveness could improve rather significantly.”
He said that the NSE is unwavering in its commitment to solidify its leadership position as Africa’s foremost securities exchange, and is committed to initiatives that will position the bourse as an attractive listing and investment destination.