Analysts have said that the uncertainties in  the Eurozone countries may be a blessing in disguise for frontier markets, including the Nigerian capital market.

According the analysts, it is likely that activities in the Nigerian Stock Exchange will close positive this week.

The analysts’ optimism was based on the evolving trend towards the end of   last week, at the major market indicators recorded significant improvement.

Specifically, the NSE’s All-Share Index rose by 2.5 per cent or 539.24 basis points to close on Friday at 22,110.91 basis points, up from 21,571.67 points at the beginning of the week.

Similarly, the market capitalisation of the listed equities rose by 2.5 per cent or N173bn from N6.886tn at the beginning of the week, to N7.059tn on Friday.

Analysts noted that the interest in the market could be largely as a result of the ongoing crises in the Eurozone, as foreign investors seem to be taking refuge in frontier markets.

In their weekly report last Friday, analysts from Vetiva Capital Management Limited noted that Central banks in Europe and Asia attempted to stimulate the sluggish global economy by loosening monetary policy and cutting interest rates, adding that for instance, the People’s Bank of China surprised investors by lowering its main one-year lending rate to six per cent, showing that the economic slowdown has extended beyond Europe.

They said, “The third quarter of the year kicked off on a bullish note, as buying interest in value counters drove the NSE-ASI forward, as the Index returned 2.37 per cent for the week. More importantly, perhaps reflecting rising investor appetite, is the increased market liquidity as reflected in the appreciable increase in activity level relative to the previous week.

“In the fixed income market, there was heightened interest in the bond market as speculation of a possible dovish stance from the Central Bank of Nigeria’s July Monetary Policy Committee sitting triggered some long position taking by traders who anticipated demand from the Pension Funds Administrators.

On their part, analysts from Meristem Nigeria Limited noted that more investors seemed to be attracted to companies in the banking as well as the insurance sectors, adding that activities in these sectors had buoyed the market last week.

They said, “Sentiment appears to be gradually tilting in favour of the market, as buyers dominated the floor with activities in the banking and insurance sector buoying the market. Oil and Gas and Food & Beverages sectors also gained all through except the respective losses posted on Thursday and Monday.

“The bullish week may also have been fuelled by investors taking positions as the market awaits the release of more second quarter results and we anticipate a dominance of the bulls this week as factors that drove the market last week remain relevant and valid.”

Source: Punch/Udeme Ekwere