Afrinvest has prepared a well written report on the reinstated 5% circuit breaker. Here is an excerpt:

Going Forward: What are the Opportunities?
Overall, Afrinvest Research expects  that a return to +5%/-5% will lead to a significant sell-off in Nigerian equities, and a sharp decline in market valuations. However, we expect that the return to previous levels of daily trading liquidity will encourage long term value investors  to focus on bargain acquisitions of stocks with healthy operating fundamentals, high cash generative businesses, and a good dividend history. Similarly, we believe that book value based trading multiples will likely provide the basis for a floor on commercial bank market prices. While we do expect that market reactions to the re-instated trading boundaries will be swift and potentially outsized, we recommend a continuous and careful evaluation of selected stocks going into 2009. Further, we expect that as prices begin to test new lows, and dividend yield thresholds begin to approach the same level as corporate Return on Equity (ROE) targets for many cash rich companies; defensive share buy-back programs will begin to appear even more attractive to several of these companies. We expect that some of these buy-back programs will be financed by a cut back on dividend pay-out  ratios, as effective yields continue to improve with declining prices.

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