Many investors in the Nigerian stock market have been cautious about further investment as a result of the volatility of the market it recent times.
But the Nigerian stock market is not alone in this trial period as China stocks, among
others across the globe, are passing through the same unsettled phase.
Experts believe that risks abound in every form of investment, whether in the capital market, money market or other sectors.
According to them, the risks of investing in the capital market in a period of economic hardship is not different from losing money to inflation. The most important thing is to follow guides on safe investment.
WHAT YOU NEED
Despite economic downturns, there are always opportunities for investors in the capital market but the trader must get acquainted with trades happening in the market, experts have said.
An investment and research expert, Mr. Ayodeji Ebo, says investors should always have a long-term instead of shortterm horizons when investing in the capital market.
He explains, “The capital market is not meant for short term trading because the risks would be high but for long-term investors, current valuation prevents significant lopsided opportunities.
“Trading activities are mainly driven by our local investors; so what we expect is that people will be very cautious of the weak macroeconomic environment. But the current prices of most of these stocks do not necessarily reflect the fundamentals of the companies.”
Another expert, Mr. Rotimi Fakayejo, says that this is a good time for investors to invest in the market even though it does not change the immediate.
He adds, “It is good enough for investors to hold unto what they have but if there are available funds, they can increase their portfolios.
“Investors have to be decisive and see their investments as one for the future, because it is neither going to be in six months nor a year. But if they make gains in less than a year, that will be fantastic. However, they must be futuristic in their perspective.”
He further explains that, despite the hardship in the economy currently, the determination
of the Federal Government to revive economic activities will witness the thriving of a lot of sectors.
“There will be more possibilities in the industrial growth sector, like the cement and manufacturing sectors and by the time the economy becomes viable, then they will definitely have more patronage for their products and this will imply on the P&L,” he notes.
To ensure credible, worthwhile decisions, investors must identify stocks that have been
consistent in terms of their dividend payments, bonuses and company management.
Despite the challenging situation with the economy last year, some companies were able to make profits in the third quarter of 2015, and this sends a positive signal. Thus, it is expected that the new year may not eventually deviate from that trend.