As the ripples of the petrol pump price hike and other emerging micro and macroeconomic developments in the nation’s economic space continue unabated over the past week, investment experts at Bancorp Securities Limited have advised investors to broaden their investment portfolios for assured returns.
The analysts, in the firm’s ‘Weekly Stock Recommendations Jun 05 – Jun 09, 2023’ published on Monday, made the recommendation despite the bullish performance of the equities market over the past few days.
They noted that the NGXASI gained 5.37% WoW at market close on Friday, thereby enhancing the local bourse’s YTD returns to settle at 8.92%.
The experts stated: “The activity in the Nigerian bourse was vibrant most especially in the financial services sector, which accounted for 73% of the volume of shares traded during the week, followed closely by the Conglomerates sector which accounted for 7% of total shares traded. Individual stocks that gained significantly, some of the stocks which were predominantly bullish were CONOIL, ETERNA, MRS amongst others, due to the expected profitability in downstream sector operations as precipitated from the Fuel subsidy removal. All indexes under our coverage closed bullish.”
Having appraised the performance of the various sectors in the bourse during the week in review, the investment experts recalled that the bullish run heightened in the first trade day of the previous week returning 5.23% and slowed down, primarily due to profit taking activities.
On their projection for the current week, the firm’s analysts predicted: “In the current week, we expect a slow but consistent decline in the overall performance of the Nigerian bourse. This is preceded by supply-side inflationary pressures which would invariably inhibit demand in the real markets.
“The consumption demand for money, would negatively affect the speculative demand for money, thence we expect massive sell off in the current week, albeit if or when the proposed strike action by labor unions commences. Following the removal of subsidy, which saw the official pump price of PMS is N488 representing a 163.78% hike from its previous position.
“In the short term, there would be major upsetting in the economic realities of the better part of Nigeria out of which 133 million are below the poverty line, but how long can this phased reality hold, when juxtaposed with the longer-term benefit of infrastructural development, projected improved standard of living and favorable exchange rates?”, they queried.
Specifically, in view of the prevailing situation in the investment market, the experts stated: “We expect the equities market to respond sharply to these developments in coming weeks, however, we advise that investors continue to rebalance their portfolios with securities with good fundamentals.”
Despite the pesky investment climate, the analysts still recommended LAFARGE (WAPCO) and NASCON to investors to buy while they advised that investment on NESTLE should be put on hold, despite the strong financial performance of the company over the past months.
