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Happy New Year. Equity investors in the Nigerian capital market are no doubt counting their
losses in a year that has left so many of them traumatized.
Last year had started for majority of investors on a bullish note as the stock market consolidated
the previous years gain with capitalization of listed equities hitting the N13 trillion mark
as the end of the first quarter. The list of those who lost money to the crisis is enormous,
from the big time investors to the small ones.
A perfect description of the situation was captured by an investment analyst who observed
that the month of March brought to a plateau the market bubble which has been sustained by
the banking industry excessive margin trading credits particularly for the purchase of its
own shares. Investors had lost 32 percent in price movements only between the March 5 and the
first week of October.
However, by the time trading ended on Monday, December 29, 2008 the market capitalization
of listed equities had dropped by N6.2 trillion, closing the day at N6.9 trillion while the
all share index stood at 31,182.45.
During the bubble a lot of people saw the stock market as an avenue to earn quick returns
which their deposits in the banks could not have provided even in five years in some cases.
The regulatory authorities and other stakeholders had been compelled to adopt measures that
would instil confidence in the system particularly through the reduction in charges, appointment
of market makers and share buy back option by quoted companies.
Although, the market has since exhibited some signs of recovery, investors are still treading
with caution in view of the global financial crisis and its effect on the domestic market.
Analysts also expressed the possibility of profit taking on some selected stocks by investors
who entered the market below the prevailing prices while others may remain on the sideline
until the year goes into full throttle.
We implore investors to take advantage of the current low prices for strategic medium to long
term positions in the market. Investment in stocks that have good fundamental and have prospect
for growth in the medium to long term will be a wise decision for investors, analysts at FSDH
Research posited.
It is however expected that the market would recover fully and investors confidence restored
in the new year 2009.
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