Has Nigeria shifted from bull to bear market?

Trade volumes on the Nigerian Stock Exchange have shown a continued decline this week, signaling a shift in investor sentiment. Ifedayo Olowoporoku, an Analyst at Vetiva Capital, joined CNBC Africa to provide insights on the current trading session. Last week, there was some skepticism about whether the decreasing volumes indicated a waning investor interest. However, with trading volumes hovering around two billion Naira, it seems that caution is prevailing in the market. Olowoporoku pointed out that while this shift is not necessarily towards a bear market, investors are approaching the market with a sense of prudent restraint. The recent decline in volumes follows a significant bull run in the market, with prices surging by about 30% last quarter. It is not surprising that investors are now more cautious, waiting for a catalyst to drive the market to the upside. What might serve as this catalyst? Olowoporoku highlighted that upcoming earnings reports, particularly in the consumer goods sector, could provide a boost to the market. Many consumer goods companies struggled last year, but with a low base for comparison and improved liquidity in the currency markets, the sector is expected to show better performance this year. Companies like UAC, which have endured challenges in the real estate sector, are also expected to see improved earnings. However, caution remains as they navigate potential fundraising activities. On the multinational front, companies like Nestle and Unilever are expected to maintain their status as top picks for investors. Despite facing difficulties in the previous year, their earnings are projected to rebound, making them attractive investments. Olowoporoku advised that while these companies still offer good value, investors should be mindful of the current market conditions where prices have seen a significant rally. As the market continues to navigate through uncertainties, it is clear that a sense of cautious optimism is pervading investor sentiment in Nigeria.