In spite of the bullish sentiment in the equities market that has seen the market rising over 30 percent this year, investment analysts have predicted that further uptick in stock prices.
According to them, most of the stocks still trade at single pried-to-earning (P/E) ratio which make good buy for investors.
Investors’ gain at close of trading last weekend climbed to N2.1 trillion just last week with the market capitalization of all listed equities soaring to N18.308 trillion from N16.207 trillion in the previous week. The benchmark All Share Index (ASI) also surged by 13 per cent to 35,037.46 points, thereby pushing the Month-to-Date (M/D) and Year-to-Date (Y/D) returns to 30.6 and 30.5 per cent respectively.
The breakdown of activities during the week showed that investors’ interest in Dangote Sugar Refinery (+34.5%). Zenith Bank Plc (+20.9%), Nigerian Breweries (+21.4%), Airtel Africa Plc (+21.1%), BUA Cement (+20.9%) and Guaranty Trust Bank (+8.7%) joined to propel performance in the local bourse.
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The Managing Director/CEO, APT Securities and Investment, Mallam Garba Kurfi commented that most of the blue-chip companies are still trading at the single PE ratio below what is obtainable in the frontier market. He is therefore of the opinion that there is still room for improvement.
However, Kurfi said that there would be profit taking from time to time and projected some price corrections. He also said that prices would continue to move up nonetheless.
Analysts at Cordros Capital, a Lagos-based investment banking firm agreed with Kurfi that in the short to medium term, there is still scope for expansion in valuation multiples as sub 1% yields on Treasury Bills will continue to engender re-jigging of portfolios towards equities.
Managing Director/CEO, Highcap Securities, David Andori said that the rally may not be sustainable due to weakness in the macro-economic environment.
David Adonri, Managing Director/CEO, Highcap Securities, however, said that the rally may not be sustainable owing to the weakness in the macro- economic environment.
According to him, the wild fire set off in the market as a result of the CBN’s expansionary monetary policy that is still raging may not be sustainable. “Sooner or later, correction will occur, leading to a pull back. Fatigue will definitely set in very soon as the realities of economic malaise dawns on the market,” he said.