Stock market rebound: Analysts predict 13% rise

If expert permutation is anything to go by in the nation's capital market in 2012, investment in shares is expected to rise by 13 per cent, even as investors' wealth in terms of returns on dividend and share capital appreciation will climb in the New Year.It will be recalled that the equities market had at the beginning of the year in January, depleted by a cumulative figure of 0.7 per cent.Commenting on the posture of the market in the year, financial analysts however, remain optimistic that the Nigerian equities market would close 2012 on a positive note.Leading investment bank and research firms, FSDH Securities Limited and FBN Capital Limited had recently predicted that the Nigerian Stock Exchange All-Share Index would grow by 13.3 per cent and 14 per cent respectively in the current year.Another analysts from investment bank and research firm, Meristem Securities Limited (MSL), in a report last Friday, said the index would close 2012 at 23,532.91, representing 13.5 per cent over the 2011 close of 20,730.63.MSL, which was among the top 10 stockbroking firms that led equities transactions on the floors of the NSE in 2011, noted that their expectation was being driven by the bullish outlook on the financial service (majorly banks). Nigeria's stable foreign exchange market expect-ed downward trend in yield on fixed income instruments and antici-pated positive macro-economic performance.'Our valuation suggests a robust 2012 return of 22.53 per cent for the NSE index, which we believe, is justified by the attractive valuations of our coverage comp-anies (which represent 90 per cent of the entire market). However, we are inclined to adopt a conservative outlook. This is informed by the outlook on global economy and the increased possibility that the Nigerian market might witness reduced foreign participation in 2012. We, therefore, discount our forecast by 40 per cent to arrive at an adjusted 23,532.91 index level,' they said.The analysts explained that their sectoral returns distribution showed their upside bias for the financial service sector particularly the banks, given their fundamentals, weight and volatility.'We expect the sector to dictate and lead market performance in 2012. Our 22 per cent target return is 82 per cent overweight on the financial sector particularly the banks. We will, however, subject our forecast and underlying assumptions to testing and review as events in both the economic and financial markets warrants.
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