The Association of Securities Dealing Houses of Nigeria (ASHON) has renewed calls on equity investors to seek the advice of professional stockbrokers in their investment decisions.
Besides, the association cautioned against the panic sale of shares to avert avoidable losses, expressing optimism that the market would rebound.
The Chairman of the association, Patrick Ezeagu, while fielding questions from journalists on the on-going downward swing, prompted by the massive sale of shares on the Nigerian Stock Exchange (NSE), described the situation as an unnecessary panic sale.
Ezeagu noted that two investors may not necessarily have the same motive for sale or buy order, saying this is where the need for professional investment advice from stockbrokers becomes compelling.
He stated that a trend analysis of corporate earnings in recent times indicates that many companies across sectors have posted higher earnings with good returns but this has not significantly reflected in the upward movement of their share prices.
Ezeagu explained that there was nothing unusual about this as the market generally reflects the trend in the economy, hence, investors buy into the future of these companies on the expectation of higher shareholder value.
“Those who are selling off their shares right now are speculators and not real investors. Every stock market needs speculators for liquidity but they can change investment decisions in one second. Our Stock market is forward-looking.
“Investors need not be nervous. They should consult professional stockbrokers for a sound investment decision. There is no basis for the panic sale of shares. Many companies have announced strong financial performance with prospects of increased future earnings. Why should a shareholder of such a company embark on the panic sale of shares?
“Globally, the stock market gauges the mood of the economy like a barometer. Our market is not a local one. Foreign investors have significant stakes because their analysis has always convinced them that our market has the potential for a strong Return on Investment (ROI).
“At the moment, core investors are awaiting a couple of things, including the announcement of ministers and the economic team to show the clear direction of the government.
“These are issues that are beyond the Board and Management of the Exchange but have dire consequences on investment decisions
The bearish trend has to do with the fact that the government is yet to settle down after the elections.
“However, astute and professionally guided investors should take a position now that most stocks are trading lower than their net realisable asset value and expect handsome returns when the market shall eventually rally. A mere study of most of the companies’ figures is most informative and points in the direction of a market that will definitely rally as soon as the economic team of government are in place.”, Ezeagu said.
Corroborating Ezeagu, ASHON’s Second Vice Chairman, Sam Onukwue reiterated the associations earlier call on elites and politicians in the run-up to the last general election to be mindful of their comments and affirmed that the market fundamentals remained strong.
Onukwue, however, urged the media to be wary of negative impacts of controversial headlines that can trigger the panic sale of shares. He advised investors to take advantage of the current undervalued prices of many blue-chip companies to beef up their portfolios.