Key highlights of this article
- Nigerian stocks did well in 2022 posting a combined 19.8% gain
- However, most stocks are still undervalued having lost significant value
- We spoke to investment experts who explained why now is the best time to invest
- We also advice caution as this is not an investment advice
The Nigerian All Share Index ended 2022 strongly with a gain of 19.8% represnring a much better improvement from the 6% recorded in 2021.
Stocks have now recorded three years of back to back gains the first time since 2000 when stocks gained for eight years staight.
The performance at the tail end of 2022 is against the backdrop of interest rate hikes, exchnage rate challenges, drastic reduction in foreign portfolio inflows, Ukraine-Russia war, and the impending 2023 elections.
But while the All Share Index has done well, several stocks took a beating posing an investing opportunity for investors.
Buying opportunities: While most investors are fidgeting as asset prices plummet, those with a cool head are able to see the resulting low prices as a buying opportunity. Often, fear drives asset prices well below their fundamental or intrinsic values, rewarding patient investors who allow prices to revert to their expected levels.
According to market analysts, despite the share prices of some companies currently recording appreciations the equities market presents attractive opportunities for investors in form of capital appreciation and dividend return given the low yield environment in the fixed-income space.
Also, the stocks are still currently at a low level and present an opportunity for growth in the short to medium term. That’s why stakeholders believe this is the right time to take a position on some quoted stocks that have strong fundamentals.
The current low prices of stocks present investors opportunity to respond to expert advice that what investors need to do to reposition in the face of losses in the prices of shares was to invest in the market despite recurrent losses in the recent time so as to gain in the long run.
Capital market operators’ advice: Financial analysts called on domestic investors in the nation’s capital market to leverage on the current low prices of stocks of companies quoted on the floor of the Exchange for future gains.
Mr. Tajudeen Olayinka, Chief Executive Office, Wyoming Capital, and Partners speaking to Nairametrics Tajudeen said prices are generally low and attractive at this time but the desire to pick stocks at current low prices should be reserved for investors who can afford to hold securities on a long term basis because of unpredictable volatility that could arise from possible headwinds.
The Managing Director of Crane Securities Limited, Mr. Mike Eze, also in a chat with Nairametrics said the market was ripe for investment going by the current low prices of stocks.
Eze noted that it was obvious that activities would stabilize in the market after the general elections, adding that this was the perfect opportunity for investors to stake their funds in the market.
- “This is the right time for investors to take part in the equities market, with the prices of shares at their lowest levels. Brokers are confident that after the elections, the market would begin to stabilize and investors would begin to record significant appreciation on their investments.
- “Because with the little amount of funds you will buy large quantity of penny stocks or low price stocks, and that enhances your position as a shareholder. If dividends are declared by such companies, the shareholder will earn a sumptuous dividend.
Kasimu Garba Kurfi, Chief Executive Officer and Managing Director, APT Securities and Funds Limited advised investors especially local investors to take advantage of the current low prices of stocks before foreign investors are expected to show interest after elections start taking positions.
- “The prices are very low, the advantage is to invest now, and the earlier local investors take a position the better before foreign investors start taking positions after the 2023 elections. It is expected that when a new government comes on board, foreign investors will be attracted to the market and most of the stocks currently trading below the par value will go up,” he said.
The Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, agreed that when assets were down, those with the resources could leverage the market.
- “When asset prices are down, people who have the resources should go in.”
- “It is just a market panic we are witnessing as a result of the war in Ukraine, and the war will not be there forever. It is just a logical thing that anybody who has the right advice and resources should go in and buy.”
