Nigeria’s low priced stocks hold value for long term investors
The current price levels of most stocks listed on the Nigerian Stock Exchange remain good for long term investors.
As equity dealers prepare for another session of remote trading this week, their bets will be in favour of fundamentally sound stocks that have continued to trade below their fair values.
Nigeria stocks had climbed by +1.41 percent in the trading week to Friday August 7 on renewed optimism that companies’ earnings will begin to improve as the nation’s economic activities pick up. The NSE ASI rose for five straight days, thanks to investors who showed interest in banking, oil & gas stocks.
Despite the capital appreciation recorded last week, market watchers still advice investors to trade cautiously in the short term due to market volatility.
“Our view continues to favour cautious trading as risks remain on the horizon due to a combination of the increasing number of COVID-19 cases in Nigeria and weak economic conditions. Thus, we continue to advise investors to seek trading opportunities in only fundamentally justified stocks”, Cordros Capital research analysts said.
The record gain valued at about N180billion helped erase this year’s losses (-6.71percent). The value of listed stock on the Nigerian Stock Exchange (NSE) increased to N13.063trillion from week open low of N12.882 trillion, while the NSE All Share Index (ASI) increased to 25,041.89 points from 24,693.73 points at the beginning of the review trading week.
Trading sessions for last week were characterised by bargain hunting as investors reacted positively to a number of earnings results released by bellwether stocks, in addition to the stability seen recently in the crude oil market.
In the review trading week, NSE Banking Index increased most by +4.94 percent, followed by NSE Oil & Gas Index which increased by +4.81 percent.
Except NSE Insurance Index (-0.28percent), other sectoral indices closed the week in green –NSE Consumer Goods (+0.72percent), and NSE Industrial Goods (+0.10percent).