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Brexit: Finance experts foresee slowdown in foreign investors’ return to NSE


Lagos  –  Some capital market analysts said on Monday that the exit of Britain from the European Union (EU) would slow down the return of foreign investors to the Nigerian Stock Exchange (NSE).

They told the News Agency of Nigeria (NAN) in Lagos that foreign portfolio investors would no longer rush to the NSE, but would watch the impact of the exit on other economies.

Dr Uche Uwaleke, Head, Banking and Finance Department, Nasarawa State University, Keffi, said that the exit would reduce the amount of financial aid from the EU to developing countries, including Nigeria.

“This is because Britain is a major contributor to the financial resources of the EU.

“Any trade agreement already entered into between Nigeria and the EU may have to be re-negotiated following the exit,” Uwaleke added.

He reiterated that Brexit had heightened uncertainty in world financial markets.

NAN recalls that Britain exited from the EU on June 23, the outcome of which caused David Cameron to resign as Prime Minister.

Since June 23, world financial markets have reacted negatively to the exit. The exit has also forced the sterling to a sharp fall noticed in 1985.

Uwaleke added that investors would channel their investments from the volatile assets class such as stocks into more stable assets like gold.

He stressed that the stock market this week would be characterised by profit taking, as well bargain hunting, as domestic investors continue to reposition, in anticipation of the return of foreign investors.

Mr Ambrose Omorodion, the Chief Operating Officer, InvestData Ltd., Lagos said that the market would experience a slowdown in activities with “wait and see attitude’ of traders and speculators due to the exit.

Besides, Omorodion said that the market would witness mixed performance this week due to profit taking by short-term investors.

He, however, urged investors to reposition ahead of anticipated second quarter earnings season that would kick off in July.

NAN reports that a turnover of 2.39 billion shares worth N26.38 billion were exchanged by investors in 28,072 deals last week.

This is against the 2.16 billion shares valued at N20.39 billion traded in 24,369 deals in the previous week.

The Financial Services industry led the week’s activity chart in volume terms with 1.95 billion shares worth N16.83 billions, traded in 17,226 deals.

The Conglomerates sector followed with 223.16 million shares worth N477.06 millions, achieved in 1,461 deals.

The third place was occupied by the Consumer Goods industry with a turnover of 91.71 million shares worth N6.25 billion, transacted in 4,433 deals.

Also the NSE All-Share Index last week appreciated by 1,402 points or 4.79 per cent to close at 30,649.66, compared with 29247.27 posted in the preceding week.

The market capitalization, which opened at N10.045 trillion, rose by N482 billion or 4.79 per cent to close at N10.527 trillions, due to huge gains by some blue chip companies.

Glaxosmithkline led the gainers’ table in percentage terms by 55.56 per cent or N7.90, to close at N22.12 per share.

Champion Breweries followed with a gain of 44.35 per cent or N1.53 to close at N4.98, while Transcorp improved by 31.58 per cent or 98k, to close at N2 per share.

On the other hand, NEM Insurance topped the losers’ table in percentage terms by N13.76 or 15k, to close at 94k per share.

Trans- Nationwide Express trailed with a loss of 10.19 per cent or 16k to close at N1.41 and DN Meyer dipped by 9.09 per cent or 9k, to close at 90 per cent. (NAN)

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