Investment experts at Bancorp Securities Limited, one of the leading investment research and consulting services firms in Nigeria, have predicted positive outlook for the Nigerian Exchange trading sessions this week, maintaining its current momentum though at a slower pace.
The analysts, in the firm’s ‘Weekly Stock Recommendation for Jan 08 – Jan 12, 2024’ sourced by our correspondent, hinged their projection on the current economic reforms of the government, especially those that have direct bearing on fiscal reforms which are expected to be materialized in the current year.
The experts forecasted: “In this current week, we expect the Nigerian bourse to remain positive, sustaining its bullish momentum, albeit at a slower space, that have direct bearing on fiscal reforms which are expected to be materialized in the current year.
“There might be minor correction across sectors, as investors realize capital gains, however, the upward trend is expected to continue predicated upon; fiscal and monetary reforms, FY 2023 earnings projections and expectations of dividend payments, topline management reorganizations and others”, they added.
The investment experts recalled the National Bureau of Statistics, recently reported Nigeria’s total debt portfolio at NGN87.91 trillion as of Q3 2023, representing a 0.61% margin from its NGN87.38 trillion in Q2 2023, with NGN31.98 trillion in external debt, and NGN55.93 trillion in domestic debt for the period.
According the Bancorp Securities’ experts, many analysts project a further hike on this status quo into Q3 2024, stemming from the 2024 federal government budget deficit of NGN9.18 trillion with the attendant implication for rising debt levels, with minimal commensurate infrastructure development.
They identified the causative factors as including but not limited to inflationary business operating environs, due to stringent borrowing conditions which more often include; consistent rate hikes, which are precipitated from ‘biddings for borrowings’, from finite pool of funds.
The experts further clarified: “Depreciation of the domestic currency, in the process of enhancing the competitive advantage of imports, over their domestic counterparts, as referenced from a United Nations World Economic Situation and Prospects (WESP) report for 2024.
“The propensity towards debt overhang and/or debt trap, as in the Nigerian case, which is being marred by a depreciating naira with bleak prospects, and high rate of rural urban migration, amongst other factors militating against production in the domestic economy”, they added.
The analysts noted that in the start of this new calendar year, the January effect on equities was observably unprecedented, with capital gains on front runner assets in the previous year, spilled over into the start of 2024, and amplifying gross returns.
The bullish engulfing of the broad market index, the NGXASI, consolidated at higher levels, as the NGXASI returned 6.54% w/w, other trade parameters didn’t let off, as volume traded through the week increased by 179.92% to record an excess of 3.32 billion units, alongside the 32.87% and 96.06% premiums on weekly value traded and deals respectively.
