Dividend yield 'll determine market direction ' Analysts

The direction of the capital market will be largely determined by the dividend yield of the equities market in the next few weeks, analysts have said.The analysts, who spoke in separate interviews with our correspondent on Friday, said the market still remained volatile as a result of the losses recorded by investors in recent time.This, according to them, has resulted in excess supply of equities in the market, as investors are selling off chunks from their portfolio to patronise other investment options, such as the bonds market and the money market.The Managing Director, Lambeth Trust and Investment Limited, Mr. David Adonri, said the market might continue to record instability until investors were assured of the safety of their investment, especially againt continuous losses.According to him, it is not enough that some companies have begun to declare impressive third-quarter results, but there have to be more attractive factors to attract investors to the equities market.He said, "I think what the market needs now is some real good news that can boost investors interest, or else, we might continue to witness this high level of volatility that has been seen in the last few months."Specifically, I believe that if, for instance, the dividend yield in the equities market becomes competitive with that of the money market or the bond market, then, investors may begin to shift focus to the equities market once again."According to him, right now, the direction of the dividend yield seems to favour other investment options, as the equities market is currently recording low yield.Analysts from Vetiva Capital Management Limited, in their report for the week ended October 21, 2011, noted that some investors seemed to be attracted to the market as a result of the low prices of some good stocks in the market.They added that the results of a few companies, released into the market last week, had also served to increase activities marginally.According to them, if the trend continues into this week, the market may record some level of stability.They said, "With the local equity market performing fairly well last week, sentiments hint at further strengthening this week, amid uncertain yield direction on the bond market. "A host of positive third-quarter results should add further impetus and incite positive investor interest. On the back of these factors, with guarded optimism, we expect the bullish trend that trailed the end of the equity market this past week to hold sway in the early parts of the coming week."Last week, the NSEs All-Share Index appreciated by 387.62 points or 1.9 per cent to close on Friday at 20,257.47, while the market capitalisation of the 188 First-Tier equities rose to N6.412tn.
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