Investment analysts at Bancorp Securities Limited, one of Nigeria’s investment research and consulting firms, have predicted that the bullish momentum that characterized trading sessions in the nation’s equities market over the past week may be reversed this week as the planned industrial action workers and other factors may impact negatively on the market’s performance.
In the firm’s ‘Weekly Recommendations for Sept 04 – Sept 08, 2023’ released on Monday, the experts noted that whilst there were varying outlooks on the Nigerian economy, various stakeholders noticeably the Nigerian Labor Congress (NLC) has made public its intentions to embark on a 2-day warning strike action to commence on Tuesday, September 5, 2023.
According to them, the major implication of this action if/when implemented includes, but not limited to, national productivity decline, eliciting a hasty albeit well deserving complementary fiscal policy after the fuel subsidy removal. Premium Motor Spirit (PMS) which now sells for N617 per litre on average, which represents an unprecedented 211.6% hike since the new administration commenced duty.
The researchers also hinged their dovish performance forecast of the Nigerian bourse to uncertainties around the policy response of the Federal government and the broader economic impact on the revenue generating capacity of companies.
In addition, they pointed out that the consistent rise in prices of crude oil may have heightened the concerns of the NLC should the Federal Government renege on its words on price modulation for ‘petrol’ at the pump in the country.
The analysts noted that expectations of Saudis’ production cut in Q4 2023, reinforced the former, as oil marketers express concerns around costs of supplies.
They projected: “In the current week, we expect the Oil and Gas index market breadth of its constituent stocks remains shallow. The momentum on the Consumer good index as championed by DANGSUGAR and NASCON may recede, as the bourse awaits approval of the proposed stock for stock merger.
“The Financial Services sector will continue to drive the market performance volume wise, however Banking Stock growth are to be predominantly driven by half year results which have already started rolling out and proposed half year dividends”, the researchers added.
