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Market reacts to CBN margin policy, world market stability —Eluehike
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Peter Eluehike, managing director, Hedge Securities ltd has said that the consistent down trend of the market in recent times is in reaction to some critical policies and developments in the market. He said that the Central Bank of Nigeria (CBN)’s margin policy really affected the market because most stockbrokers are tied to the available trading funds that are not enough for the market that is exploding.
According to him, most of the foreigners that moved their funds to Nigeria are now taking their funds to balance the loss witnessed in Western markets. “You know most companies quoted on the Nigerian capital market have significant percentage of their investors from their partners. Most of them are now selling their stocks to see if they can close the gap so created,” he said.
Eluehike said that another factor that is causing price drop in the market recently is profit taking on the side of the investors. He said that most investors who benefited from the bullish run witnessed around the months of March and April would like to take their profits and either reinvest in another stock or change portfolio.
“The market, we remember, rallied during the months and most investors saw that as golden opportunity to pull back their resources in anticipation that after a long bullish run, the market would experience some drifts. You also will remember that when so many sellers are in the market with fewer buyers chasing the goods, the prices of the goods are bound to drop,” he opined.
Another thing that acted upon the market to result on the drop in price of stocks he said is the fact that banks with stockbroking firms are pulling resources to support recapitalization of their subsidiaries. This, he pointed was in pursuit of stockbroker’s N1 billion capitalization as directed by the regulatory bodies.
It will be recalled that the market capitalization and the index have continued to dwindle in appreciation since Monday April 28, 2008. On that date, the Market Capitalization was at 11.623trillion while the All Share Index stood at 60,122.77 basis points.
On Tuesday April 29, Market Capitalisation dropped to 11.534 trillion and the All-Share Index dropping to 59,663.22 further on Wednesday April 30, to 11. 491 trillion and All-Share Index leveled at 59,440.91 basis points. The market drift continued as the capitalization again on Friday May 2, dipped to 11.430 trillion while the All-Share Index recorded 59.124.87.
It will be remembered that the Nigerian Stock Exchange (NSE) traded only for four days as Thursday the first day of May was a public holiday. After the Friday transactions, the five days that completed the week ended on Monday May 5, with market capitalization slightly gaining some appreciation to close at 11.453 trillion while the All-Share Index rising a little to 59,243.78 basis points.
According to him, most of the foreigners that moved their funds to Nigeria are now taking their funds to balance the loss witnessed in Western markets. “You know most companies quoted on the Nigerian capital market have significant percentage of their investors from their partners. Most of them are now selling their stocks to see if they can close the gap so created,” he said.
Eluehike said that another factor that is causing price drop in the market recently is profit taking on the side of the investors. He said that most investors who benefited from the bullish run witnessed around the months of March and April would like to take their profits and either reinvest in another stock or change portfolio.
“The market, we remember, rallied during the months and most investors saw that as golden opportunity to pull back their resources in anticipation that after a long bullish run, the market would experience some drifts. You also will remember that when so many sellers are in the market with fewer buyers chasing the goods, the prices of the goods are bound to drop,” he opined.
Another thing that acted upon the market to result on the drop in price of stocks he said is the fact that banks with stockbroking firms are pulling resources to support recapitalization of their subsidiaries. This, he pointed was in pursuit of stockbroker’s N1 billion capitalization as directed by the regulatory bodies.
It will be recalled that the market capitalization and the index have continued to dwindle in appreciation since Monday April 28, 2008. On that date, the Market Capitalization was at 11.623trillion while the All Share Index stood at 60,122.77 basis points.
On Tuesday April 29, Market Capitalisation dropped to 11.534 trillion and the All-Share Index dropping to 59,663.22 further on Wednesday April 30, to 11. 491 trillion and All-Share Index leveled at 59,440.91 basis points. The market drift continued as the capitalization again on Friday May 2, dipped to 11.430 trillion while the All-Share Index recorded 59.124.87.
It will be remembered that the Nigerian Stock Exchange (NSE) traded only for four days as Thursday the first day of May was a public holiday. After the Friday transactions, the five days that completed the week ended on Monday May 5, with market capitalization slightly gaining some appreciation to close at 11.453 trillion while the All-Share Index rising a little to 59,243.78 basis points.
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