Tuesday, September 09, 2014 5:14 PM / Research
The big question is how do you preserve your portfolio during the periods of uncertainties as election year get closer? It was observed that the big monies appeared taking leave gradually to a safe haven in preparation for unnecessary shocks- between July and August 2014, Market Net-Worth declined by N313.74billion. We believed that it is very important you- LOW-INCOME-EARNERS to preserve your money if you cannot make money during these periods of uncertainties.
As Nigerian stock market finds it more difficult to climb the ‘wall of worries’ in the recent times, investors or portfolios in the Nigerian Stock Market are already going through portfolio rebalancing and stock reshuffling as the 2015 general election is fast approaching- this is considered necessary as the uncertainties associated with in-coming elections have strong potentials to disturb trends and affect wealth in the capital market.
In this regard, we believe that as political parties go through polls in February 2015, investors are preparing for the market reaction to what could be the outcome of one of the most significant elections in decades as sentiments towards ruling party is significantly mixed while stronger opposition party is alive to the game this time around. The building-up outlook to election year suggests tug of war amid weak security infrastructures.
If we are to consider 'If-Analysis', the change of power would have enormous impact on Nigerian economy at large and of course capital market is not immune against whatever the ripple effect could be. Both monetary and fiscal policies may take a new course with a different approaches and economic theories- This further throws more light on the uncertainties mentioned above.
In this reality show, savvy and experienced investors or portfolio managers have already taken and still taking position to reflect these incoming realities as the recent consistent sell-down on the Nigerian bourse could not be distant from this fear of unknown. The recent report on foreign portfolios participation on the Nigerian bourse indicates consistent sell-down from foreign investors, depressing market further into negative zone.
The purpose of this article is to guide you- Low-income-earners on the type of stocks you should be patronizing as market moves closer to Q4'14- the quarter, which market uncertainties and price volatility may move-up to next gear.
Though, your risk appetite remains an important factor as we implore you to shun penny stocks at this time of growing market uncertainties, except penny stocks with good fundamentals. The stocks with good fundamental do retain value and often recover very fast after a general market downturn. At this period, you should not get scared of high-priced stocks are, they tend to retain value and recover very fast.
Below are the stocks that have retained value so far this year despite consistent sell down and pessimistic trading in the last 3 quarters. These stocks have enjoyed strong investors’ loyalty on the back of improved fundamentals.
We believe this class of stocks would stand and survive the market volatility with strong potentials to climb the wall of worries ahead. And incase of any eventualities, they have strong fundamentals to drive quick price recovery.
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