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Experts hinge 2019 stock market performance on external, internal factors

Some financial experts have identified the outcome of the general elections, direction of monetary policy and US-China trade tension as factors that would shape the stock market in 2019.

They told the News Agency of Nigeria (NAN) in separate interviews in Lagos that stock market performance in 2019 would be shaped by both external and internal factors.

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Prof. Uche Uwaleke, Head of Banking and Finance Department, Nasarawa State University Keffi, said that US Federal Reserve monetary policy stance and the ability of the Organisation of Petroleum Exporting Countries (OPEC) and allies to keep oil price high, would shape stock market performance in 2019.

Uwaleke said that political tension and outcome of the general elections in Nigeria, the fate of the 2019 budget and direction of monetary policy would also determine stock market performance.

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To ensure improved performance of the nation’s stock market, he urged the Federal Government to defuse political tension by ensuring free, fair and credible elections.

“While we may have no control over the external factors, efforts should be made to defuse political tension, through the conduct of free, fair and credible elections,’’ Uwaleke said.

He said effective budget implementation would also help to create the right environment for both domestic and foreign investors.

Uwaleke, however, attributed the dismal performance of the Nigerian stock market in 2018 to increasing yield environment in the US, following gains from the normalisation of interest rate by the US Federal Reserve.

He noted that the second factor that hindered stock market growth, during the period under review, was political tension ahead of next year’s general elections.

Mr Sola Oni, a Chartered Stockbroker and Chief Executive Officer, Sofunix Investment and Communications, attributed the lacklustre performance of the stock market to illiquidity in the system.

Oni explained that massive share dumping by nervous portfolio investors and their Nigerian counterparts who were apprehensive of likely crisis during the 2019 general elections contributed to the market lull.

“This is reinforced by unguarded utterances of the political class,’’ he said.

According to him, the outcome of the next general elections and ability of government to tackle the ongoing economic challenges, especially investment in infrastructure, will shape the stock market in 2019.

Oni said effective management of fiscal and monetary policies and creation of sustainable conducive business environment, among others, were expected to shape activities in the stock market.

“However, there are investments that thrive during recession.

“Hence, investors should take advantage of professional advice from stockbrokers and other investment advisers who keep tabs on investment opportunities,” he said. (NAN)

 

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