Weak market sentiment to prevail this week – Analysts

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Stanley Opara

Analysts in the country’s capital market space say the performance of the capital market is likely to be weak this week considering the current market fundamentals.

They said the performance could be like that of last week, though with pockets of bullish sentiments, as investors continued to take positions in anticipation of dividend payments upon the release of 2016 financial scorecards.

“However, we underscore that the general market mood remains weak, as last week’s performance was largely steered by 13.04 per cent and 11.57 per cent gains recorded by Nigerian Breweries Plc and Guinness Nigeria Plc, respectively.  In the coming week, we expect the current market trend to extend,” analysts at Meristem Securities Limited said on Sunday.

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For the equity market, the analysts at Vetiva Capital Management Limited expect trading to be dictated by investors’ reaction to corporate earnings announcement as the earnings season gets fully underway.

They added, “For the fixed income market, we expect cautious trading at the start of the week as investors look ahead to the Primary Market Auction.

“For currencies, we expect improved dollar availability to continue to reduce the pressure in the parallel market. However, the ability of the Central Bank of Nigeria to consistently and effectively meet demand will be key to the success of the policy on the long run.

“While we highlight that the recent accretion in foreign exchange reserve provides some leeway to defend the currency, the size of the demand backlog remains worrisome.

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“We reiterate that consistent improvement in dollar inflow as well as a more comprehensive forex policy remains paramount to providing a sustainable solution to the persistent forex conundrum.”

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