Investment researchers and economists at Bancorp Securities Limited, one of Nigeria’s investment research and consulting firms, have projected that despite the current gloomy macroeconomic indices of the nation’s economy, trading in the Nigerian Exchange this week held promising potential for returns to investors, though at a slower rate.
The experts, in the firm’s ‘Weekly Stock Recommendation: Jan 02 – Jan 05, 2024’ circulated to our correspondent on Wednesday maintained that the macroeconomic parameters appeared gloomy, with various analysts’ projections connoting stunted growth momentum for the Nigerian domestic economy, commencing 2024.
They pointed out that, however, summarizing the presidential January 1, 2024 speech, major pointers to a sprouting economy was expected to be channeled through improved security architecture, which has a direct bearing on major food production areas, and inadvertently have a positive impact on food inflation, which is at an all-time high of 32.84% as at November 2023, amongst others.
In addition, the researchers also identified the Enhancing infrastructure framework, evidenced in the workings of the 2024 national budget, wherein a 65.8% increase in revenue projection of NGN18.32 trillion, driving debt servicing down to 45.02% of 2024 revenue (as against the 73.5% debt service in 2023) and a 31.6% total federal budget capital expenditure for the year 2024, amongst others, as other factors that would influence the sentiments in the local bourse.
Specifically, the experts predicted: “In this current week, we expect the Nigerian bourse to remain positive, although characterized by a comparative slower growth rate. Financial services sector is projected to drive momentum on the bourse, with particular focus on low capitalized stocks, Industrial goods sector is expected to close flattish, save for stronger fundamental news amidst, cautious and conservative trades in the Oil & gas sectors.”
The analysts recalled that with an appreciable 45.90% YTD return, the Nigerian bourse closed 2023 calendar year at 74,773.77 points.
According to them, in the final week of 2023, the NGXASI gained 1.01% w/w, wherein high capitalized stocks were predominantly bullish, bringing the weekly advancers decliners ratio to 2.00x, amidst a 52.06% w/w decline in total volume (1.18 billion units), which can be attributed to the public holidays that took away 2 trade days in the week.
The experts listed some of the key highlights of the trading sessions during the week as including, but not limited to, the bullish run on financial services sector stocks, causing JAIZBANK, ZENITHBANK, ACCESSCORP, to top the volume traded charts, accounting for 9.22%, 6.09% and 4.75% of the total weekly volume traded, respectively.
They noted that the indexes under report’s coverage during the week closed bullish, except the 1.46% decline on the Consumer goods index, as the Insurance index returned 8.19% w/w, alongside the 1.08% premium on the Banking index while the Oil & gas index gained 0.37% w/w, and Industrial goods index gained 0.01%.
