Analysts have urged investors in the Nigerian capital market to maintain a diversified portfolio.

According to the experts, this is important in the face of the instability recorded in the equities and bond market in the last few weeks.

They explained that investors needed to spread their risks across various investment classes to guard against huge losses that might be incurred when a particular asset class faced significant instability.

In their report on Monday, analysts from FSDH Merchant Bank Limited said that it was essential for investors to make conscious effort to vary their investment portfolio.

Explaining the trend in the market in the last few weeks, the analysts said that the release of financial results by some major quoted firms had not brought the expected turn of events in the market.

They added that this was visible from the fact that the market had remained mostly bearish in the last three weeks, despite the release of impressive results by major companies.

At the close of equity trading activities last week, the market capitalisation of the listed equities fell by N200bn or 1.9 per cent from N10.713tn on Monday to N10.513tn on Friday.

Similarly, the NSE’s All-Share Index lost 626.68 basis points from 33,514.14 points at the beginning of the week, to 32,887.46 points.

The NSE-30 Index also fell to 1,568.35 points, down from 1,588.59 points at the beginning of the week.

The analysts said, “The market did not show much enthusiasm to the release of corporate actions and some impressive results that have been released in recent times. We believe investors had factored the expected earnings into the pricing of these stocks. Hence, the eventual release of the result could not spark off the much desired change.

“As more results trickle into the market in subsequent weeks, we are most likely to see a haphazard trading pattern. We urge investors to stick to stocks with good fundamentals.

“Investors are advised to consider investment opportunities in the under listed stocks, as they have good fundamentals that can generate good returns in the medium to long-term.”

Also speaking on the issue, analysts from Partnership Investment Company Plc, advised investors to make use of good financial advice from portfolio managers to ensure that they did not get their fingers burnt in their investment.

They said, “Investors need to look beyond price to also consider future value before taking a buy decision. Opportunity for profit taking should not be disregarded.

“We maintain that investors ensure that their portfolio is rebalanced appropriately, while ensuring a diversified portfolio based on stocks with good fundamentals. Risk appetite and return expectation should be a major consideration.”

Source: Punch (by Udeme Ekwere)