Ruth Ibikunle
The stock market last week closed on a bearish note, shedding 0.90%. Year to date, the market has returned 1.59% with the All Share Index and Market Capitalisation at 104,563.34 points and N65.707 trillion.
In a stock market review with the MD/CEO of GlobalView Capital Limited, Aruna Kebira, the following were discussed:
Excerpts:
• The stock market last week closed lower by 0.90%. What is the outlook for the new week?
The market received a wavelength of price diminution in the world financial markets during the week as kick-started by the tariff war of Trump’s US.
The world markets on Monday witnessed slumping prices across the continents. No market was spared.
The NGX is not a standalone and is not insulated and insulated from global happenings. Especially when we still have FPIs in our stock market.
On Tuesday, as a fall out of Monday events, all the banking stocks went red, losing almost the highest possible loss for the day of 10%
But in the same vein, Trump has stayed action on the tariff for 90 days.
The market staged a comeback, but the gains were unable to erase the previous losses, hence the reason the market closed as it did.
While other markets are staging a comeback, the NGX also will stage a comeback and will be looking to close in the green for the week.
• VFD Group again led the gainers for the week with 53.86% growth. How sustainable is the growth in VFD?
VFD declared a dividend of N2.50 and a bonus of 5:1. That is about a 500% return on investment. That is massive and the market being a rewarder of good performance is taking all effort to compensate the price of the stock for a job well done.
• Is VFD Group a good buy at N87.70?
For a performing stock, no price can be too high. If on the marked-down date, the stock price comes to about N20.00, nobody knows what next step the company will take. Chance is, that other corporate actions may yet enter and drive the price upward.
Even at N87.70, who can tell when the rally in the price of the stock will climax, but for a 5:1 bonus and a N2.50 dividend, it will be a win-win at whatever price one takes position.
Yes, the price will be marked down, but the value the investor possesses on the day of the markdown is still the same. We have seen the reversals in the prices of stocks that were marked down for bonuses and dividends declaration and VFD will not be an exception.
• Why are the insurance stocks trending down?
Insurance stocks, as a fall out of their peculiar nature, are the leaders in a bear market, their prices cascade when the bear is rampaging the market,
The effect of the tariff war on prices of listed stocks is yet to wear off their prices, as they are laggards when it comes to the rally of the market. The baton of a rally is passed over to the insurance when other financial institutions’ prices have fully rallied.
• What should an investor do to minimize his loss position in a particular stock?
To minimize a loss position in a stock one must first understand the rationale behind investing in that stock. Was it based on fundamentals, sentiment, market hearsay, or a piece of privileged information?
The second consideration is to set an exit price. This is to control the effect of greed that has robbed investors of their gains and nay, their capital. And when the exit price is achieved, kindly take a bow, except you are very sure of the next phase of the movement of price in the stock.
The ability to balance fear and greed also has a big role to play. Take for instance, when VFD corporate action was declared last week, a lot of investors were afraid to key in at a price of N57.00 because there was no encouraging bid level, The same set of investors are clamoring for the same stock at N87.70.
If eventually, they can key in, for the purpose of this article, if the price goes up to N100.00, they will hold their positions and wish and hope the price gets to N120.00.
• What are the stocks to watch?
VFD, Japaul Gold, Tantalizers, Access, Nascon, Aradel, Ecobank, and a host of others