‘Crisis of confidence in capital market will dampen investors’ appetite for stocks’

The increasing crisis of confidence in Nigeria’s stock market will further erode investors’ confidence, and slow down buying interests, an analyst at Investdata Consulting Limited, has said.

Specifically, the chief research officer, Investdata, Ambrose Omodion, said there is already a panicky mode, as investors watch developments in the market.

“The listing by way of introduction of MTN Nigeria on the exchange, on which the Economic & Financial Crimes Commission (EFCC), is currently beaming its searchlight on, the court-ordered reinstatement of Mounir Gwarzo, the suspended director-general of the Securities and Exchange Commission (SEC), all add to the tension.

Also, last Friday’s removal of Jubril Adewale Tinubu, and Omamofe Boyo, as group chief executive, and Deputy of Oando Plc, respectively, owing to alleged infraction of securities regulation has implications on investors’ confidence and would impact negatively on the market.

“Oando’s decision to seek court protection on Monday, restraining the implementation of the SEC’s order, and the appointment of Mutiu Sunmonu, as head of the Interim Management Committee without doubts, would further dampened investors’ confidence.”

Recall that the All-share index plunged by 0.17 per cent following losses recorded in medium and large capitalised stocks at the close of transactions on Thursday, May 30, 2019, the day Industrial Court ordered the reinstatement of Gwarzo.

At the end of the next trading session on Friday, May 31, 2019, the market depreciated further, as the All Share Index slumped by 0.59 per cent with 23 stock price losers against 13 gainers.

At the reopening of trading on Monday, the market lost N63billion amid persistent bear run, occasioned by price depreciation in the bellwethers.

Omodion argued that the volatility will remain in the absence of any catalyst that will impact positively on the market, and stimulate investors’ thirst for equity.

“However, we would like to reiterate our advice that investors should go for equity with intrinsic value. We advise investors to allow numbers to guide their decisions, while repositioning in any stock, especially now that stock prices remain low in the midst of mixed company numbers, weak economic and market fundamentals.”