We are now more than three days into the first official week of the new dispensation and the bears still are in firm control of the market.
The equities market overturned previous day’s gains, as the All Share Index pared by 0.54% to peg the year to date return at -2.24%. Market breadth (0.53x) was in favour of decliners as 20 stocks advanced against 38 decliners. Although, volume traded appreciated by 12.61%, market turnover declined marginally by 3.32%.
After a mostly acclaimed speech that many thought galvanised the nation it unfortunately has not been able to translate to any form of economic bounce for the stock market. The Nigerian capital market in case you didn’t know is typically the earliest signal that the economy is heading in the right direction.
However, what we are now seeing is a market dominated my bears with many blue chip stocks struggling to hold on to any northward momentum. Dangote Cement, Zenith Bank, GT Bank, Nigerian Breweries, Nestle and a host of other blue chip stocks have been struggling to cross their resistance levels for weeks now.
Why is this so?
Some analysts are beginning to blame this phenomenon on something that was lacking in Buhari’s speech on Friday. The speech lacked of all things any indication of where the economy might be headed at least from the perspective of the president. This lack of direction is a major clog in the decision-making process of a lot of investors.
Business Analyst and an associate of Nairametrics, Tunji Andrews was perhaps the first to observe this lack clarity on the economy and highlighted it on Channels TV even when many were still basking in the euphoria of a new government.
His failure to say any tangible about his economic plans has perhaps left many investors in a state of flux and will rather wait this out than pump money into an unpredictable market that has shown wide volatility in recent months.
Maybe it is still early days or maybe investors are just too impatient. The truth is that we live in a world economy where utterances from political figures take up a sizeable chunk of investors perception of a market or asset. The sooner the new government says something the better for the market. For now, this is probably an opportunity for risk takers to take position.