For the past few days, the Nigerian Equities market has been on a downward trend. At the close of trade on Tuesday, the market had declined for 7 consecutive days. Though the market open the year on a bullish note as we saw 11 straight days of gain in January. The downward trend in the market in one way or the other is giving investors lot of concerns.
In a chat with Mallam Kasim Kurfi, Managing Director of APT Securities Limited, he opined that what actually started the current bearish trend in the Nigerian market was the CBN decision to review upward the CRR by 500 basis points, leaving it at 25.7%. The apex bank has been reluctant in tampering with the rate but the moment it was adjusted, this push the banks to begin to look for money which consequently up the rate at which banks now accept deposits.
‘You can trust investors, when interest goes up, they swiftly move to the money market to access a perceived superior kind of return. It simply a circular flow of funds, that is, the same set of fund moving around for better returns in wherever there is opportunity’.
Mallam Kurfi also believe that many brokers do not yet understand the new policy of the fourth quarter results. Most of them take the fourth quarter result to be the year end result which is not. You still have to do your own calculations and projections to know what year end likely to be.
According, Aruna Kebira, Chief Dealer of Global View Capital Limited, the travel ban on Nigerians by the United States of America is really taking a toll on the capital market economy. This will definitely make many citizen of the United States to repatriate their funds from the country because of the embargo placed on the country where their funds are domiciled.
Secondly, he believes Chinese being a good partner of the Nigeria economy at large, the recent outbreak of the coronavirus is seriously hampering the smooth bilateral relationship between the two populous nations. Hence causing a significant economic setback.
And third among other factors is the new finance bill which saw to the hike in vat rate which has also affected charges on the trading floor.
He however advised that investors can position in stocks with potential high AND STRONG dividend yield, mentioning Stocks like Zenith, Access, GTB , UBA, FBNH, FIDELITY AND OTHERS. No matter how low their prices goes, the higher their dividend yield will be as the current downtrend is touching almost all stocks.