Assessment of Investor Sentiment towards Real Estate Stock in the Nigerian Capital Market

Tosin Babatola Fateye and Cyril Ayodele Ajayi

ERES from European Real Estate Society (ERES)

Abstract: Investor sentiment has been empirically proven to have a significant contribution to price trend and stock make dynamics. With a focus on the Nigerian capital market, the study assesses the investor sentiment towards real estate stock (RES), aimed at ascertaining the presence, source and statistical significant of investor sentiment in the capital market. The descriptive statistics such as weighted mean score and the inferential statistical tools namely stepwise regression model and analysis of variance (ANOVA) is used to analyse the data. The study found the empirical evidence of investor sentiment towards RES, and the prominent sentiment induced measured is market news (4.1765). Meanwhile, investors' response to the good news was very high (4.2353) against the relatively low response to bad news (2.8824). Findings reveal that investors react to all the sources of news (3.1 WMS 4.0) but at vary levels, with news from pronouncement/announcement ranking highest, followed by market survey and media/press report with respective mean scores 3.6974, 3.6386 and 3.5588. Also, during the bullish period, 64.7% of the investors said they often took the decision to buy RES, similarly, 64.7% of them stick to the selling decision in the bearish market condition, whereas, under normal (balanced) market condition, 82.4% decide to hold the RES. The causal-effect analysis (stepwise regression) showed that pronouncement/announcement news with a positive beta () coefficient (.504) and a statistically significant p-value (P0.05) therefore lacking significant explanatory power. The study concluded that the evidence of investor sentiment towards RES in the Nigerian capital market signal its relevance in the assessment of the RES growth and market dynamics, with a need to take into consideration the market news especially the news emanating from pronouncement/announces on the exchange floor. The study, therefore, suggests the need to continually appraise the market news that could induce investor sentiment towards RES to complement the market underlying and technical analysis, ensure holistic review of RES performance and for informed investment decision when thinking of investing RES.

Keywords: Capital market; Investment; Real Estate Stock; Sentiment (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2022-01-01
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