Investment experts at Bancorp Securities Limited, one of Nigeria’s leading investment research and consulting firms, have advised investors to rebalance their portfolios with securities with good fundamentals in the face of the current fuel subsidy removal and current changes in the Central Bank of Nigeria (CBN) whirlwinds.
The experts, who gave this advice in the firm’s ‘Weekly Stock Recommendations Jun 13 – Jun 16, 2023’ circulated to our correspondent on Tuesday, noted that the past week had been and coming weeks were expected to be filled with directional fundamental news, stemming from the expectations and policy readjustments of the new administration.
According to the analysts, the news will be starting with the subsidy removal and the recalibration of PMS pump prices to a national average of N506.1/litre, down to reorganization of the Central Bank of Nigeria (CBN).
The firm’s researchers pointed out that the proposed policies that could have significant impact would be the implementation of the deregulation of the upstream and midstream sectors, which is expected to enhance operational efficiency and in the long run, ameliorate budget deficits and hyper-inflationary tendencies in the Nigerian economy.
Similarly, the experts forecasted that the CBN reorganization would have a positive impact on the equities markets in the short term, primarily due to the considerations around converging all multiple exchange rates, to reduce arbitration in the system and enhance liquidity in the official market for foreign exchange.
In view of the current situation, they believed that the equities markets would respond sharply to these developments in the current week, however, they advised that investors should continue to rebalance their portfolios with securities with good fundamentals.
On their stocks investment recommendations this week, the Bancorp Securities’ researchers rated LAFARGE (WAPCO) and NESTLE for buy while they advised a hold on NIGERIAN BREWERIES, despite the strong financial fundamentals of the listed entity.
Clarifying their stance on the brewing company’s share rating, the experts stated: “NB brands have proven overtime to be market leaders in its real markets, the Industry’s positive correlation with Foreign exchange anomalies in Nigeria and the purchasing power of the populace has hit a huge albeit temporary blow on the returns of this company.
“We, however, expect that once macroeconomic environment is stabilized enough as it relates to inflation and foreign exchange, this stock is low enough for a good entry point, thence our HOLD recommendation”, the firm’s analysts added.
