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Nengi Phil-Ebosie: How Long will the Raging Bull Run?

Nengi Phil-Ebosie

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How long and how far will the Raging Bull Run? Unfortunately, no one knows for sure.

It’s no news that the Nigerian Stock Market was ranked among five best performed stock markets in the world in 2017 as reported by CNN Money.
According to the report, the Nigerian All-Share index gained 43% in 2017, though the index level was miles below its high record of 66,371 points pre-global market crisis in early 2008. (Proshareng)

However, the rally witnessed in 2017 hasn’t waned, but has continued to garner momentum at the start of 2018 with the All Share Index recording 17.37% as at 17th January 2018 (FSDH Group Research) . (The highest amongst the major global market) in just twelve trading days this year .

Furthermore, it may interest you to know that at the start of 2018, other stock markets across the globe have not been left out of the rally. The US Dow Jones Industrial Average (DJIA) on January 4, 2018, hit a record high of 25,000, 19 trading sessions after it hit a record high of 24,000-mark on November 30, 2017 (CNN Money). The Dow Jones Industrial Average, a major US stock Index is considered a key benchmark for measuring the health of the US economy. The major benchmarks across US have returned 5% YtD apiece

The recent windfall may not be unconnected to the Market Anomaly known as the “January effect”.  According to the theory, the January effect is a name for the stock market’s relatively strong performance at the beginning of the year. In addition to general optimism associated with the start of a new year, the January effect is supposedly triggered by stock buying following year-end tax-loss selling (tax loss harvesting) in December. On the contrary, a Goldman Sachs analysis of returns since 1999 noted that the January effect has faded when compared to a longer history going back to 1974 (CNBC). Whether this view is right or otherwise remains inconclusive.

Corporate results are set to be the next big focus. The earnings expectations and subsequent high dividend anticipation have largely contributed to the rally experienced in the Nigerian market in the new-year. Investors believed that many quoted companies especially the financial services benefitted from the high interest rates environment in 2017 which would have translated into distributable profits by year end, hence, the need to take positions and benefit from the high dividends to be announced when audited results are released by Q1 2018.

More importantly, the improving macros such as stability ;in global crude oil prices, increase daily crude oil production, falling inflation figure, clarity in government policy direction and expanded 2018 Nigerian Government Budget (N8 trillion or US$26bn) have given impetus to equity play.

Lastly, the favorable high interest rate environment enjoyed in 2017 isn’t probable going forward as rates across all fixed income tenors have crashed by over 500 basis points in the last two months. Hence, investors are looking for alternative channels to invest their funds and enjoy reasonable earnings.

It is important to note that the good times don’t last forever for no one knows how long the Raging bull will run BUT enjoy it while it last.

Have you and are you partaking in this global windfall? Do share on Instagram @ nengidambo.

Photo Credit: Dreamstime | Andrey Popov

A Chartered Accountant and an MBA graduate of the Bradford University School of Management, UK with over 13 years work experience in Treasury, Corporate Lending, Accounting, Control, Financial management & Planning in the Financial and the Oil & Gas-servicing sector. Nengi has also completed the CFA level 1 exam.

10 Comments

  1. Diva E

    January 18, 2018 at 3:45 pm

    amazing!!!!!!! very insightful.

    • Nengi

      January 19, 2018 at 10:25 am

      Thank you DivaE

  2. Kiente Karla Dambo

    January 18, 2018 at 4:20 pm

    Detailed. .. very insightful…..

  3. Nengi

    January 18, 2018 at 6:52 pm

    Thanks Kiente

  4. Ephi

    January 18, 2018 at 7:16 pm

    Very informative post. I’ve been looking at a couple of stock charts in the FTSE and all I could say was chai! can I just rewind to November and buy these stocks?! Lol.

  5. Nakoms

    January 18, 2018 at 7:45 pm

    Start of another scam cycle. The playbook is very simple but yet people keep falling for it. Institutional investors (read scammers players) start buying up shares of companies making price go up. Brokers and media hype the new “boom” average Joe (losers) gets into the fray with hard earned money.

    One fine morning these institutional investors dump their shares taking huge profits then share price falls below average joes first purchase price, leaving him with the short end of the stick.

    There’s a sucker born every minute every minute.(James hardly chase)

    • Ephi

      January 18, 2018 at 8:00 pm

      That still doesn’t change the fact that there are bull and bear cycles. It’s all about timing your entry and exit, rather than sitting on the sidelines.

  6. Nengi

    January 18, 2018 at 8:23 pm

    @Ephi….very glad u found it informative.

  7. Nengi

    January 18, 2018 at 8:26 pm

    @Nakoms…..Timing is key…first of all it is important to understand whatever investment anyone decides to do. For the stock market…..joining the band wagon may be dangerous. Timing is very key.

  8. Preye

    January 19, 2018 at 10:39 am

    Very informative. Keep up the excellent job of educating us. I just wonder for how long will the raging bull run…

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