The Nigerian Stock Exchange, public and private sector executives in the capital market have indicated the need for discretion in investment decisions especially by retail investors. The Cowry Asset Management Limited speaking against the backdrop of declining foreign investors’ interest in equities in the first quarter of 2018, Q1’18,
cautioned retail investors to be very careful in their investment decisions, especially in the build up to 2019 general elections.
The Chief Executive Officer, Cowry Asset Management, Mr. Johnson Chukwu, gave the advice as the guest speaker at the maiden national discourse, themed, “Portfolio Investments: Opportunities & Mounting Challenges for Nigerian Shareholders”, organized by Pragmatic Shareholders Association of Nigeria, PSAN, in Lagos.
He said the decline witnessed in Q1’18 was as a result of the shift from equities to fixed income securities by Foreign Portfolio Investors, FPIs, who have started exiting the market following the unstable macroeconomic environment.
“The FPIs had taken their position in 2017 in the equities market and that was why we saw the 42% appreciation of the market, but in the Q1’18, FPIs invested $701.61 million in equity, $335.88 million in Bonds, $3.527 billion in money market, while total capital imports stood at $6.303 billion. So the equity market was sluggish in Q1’18 as foreign investors began to repatriate their dividend and also put demand pressure in the foreign exchange market in response to declining yield on government securities,” he said.
To this extent, Chukwu cautioned domestic retail investors to be careful in their investment decision on equities as the market is likely to record continuous drop given the challenging macroeconomic environment in the build up to general election.
The Acting Director General, Securities and Exchange Commission, SEC, Ms Mary Uduk, who was represented by Mr. Effiong Ekpeyong, encouraged retail investors to embrace the Collective Investment Scheme, CIS, to diversify their investments.
“Nigeria is a mono product economy as this has made the stock market very volatile. To this extent, retail investors need to spread their demand for stocks in various classes by patronizing mutual funds,” she noted.
