Researchers and investment analysts at Bancorp Securities Limited, one of Nigeria’s leading investment and consulting services providers, have projected that this week the nation’s bourse is expected to experience directional stimulus due to emerging developments in the investment space.
Specifically, the analysts in firm’s ‘Weekly Stock Recommendation for Oct 16th-20th 2023’ circulated to our correspondent on Monday, hinged their forecast on both internal and external factors, pointing out that internally the stimulus will derive from the impact of corporate actions from issuers on the bourse.
On the external propelling factors, they predicted that the anticipated bright outlook in the local bourse this week would be from the policy anticipation of the CBN with its interest rate tool in response, but not limited, to the FX challenges bedeviling the Nigerian economy, data-based inflation reports scheduled to be released today by the National Bureau of Statistics (NBS).
The analysts further clarified: “In a bid to ameliorate the discrepancies between the exchange rates on the I&E window and the parallel markets, the CBN more recently lifted the ban placed on a list of 43 items which considerably are staples.
“On the first instance, this policy is expected to drive the I&E rates higher, as liquidity remains a major setback to actualizing the economies of scale to deregulating the markets for these products.
“Secondly, if the first instance holds, then the first milestone of converging rates in both markets may have been achieved, which with intermittent intervention would drive rates downwards, albeit blockages to arbitrage in these markets, and lastly,
“The negative externality on our domestic industries could minimize the gains from this policy through diminishing net exports. This current week, we expect the broad market performance to return positive sentiments, as investors are urged to trade in assets with strong and positive fundamentals”, the Bancorp Securities’ analysts added.
