Investment experts at Bancorp Securities Limited, a leading investment research and consulting services firm in Nigeria, have predicted a mix sentiment during trading on the Nigerian Exchange this week amid prevailing micro and macroeconomic factors in the nation’s economy.
The experts, in the firm’s ‘Weekly Stock Recommendation 17th-21st March 2025’, also predicted that the continued rise in mid and long-term Treasury Bill yields may keep fixed-income investments attractive, weighing on equities. However, selective bargain hunting in undervalued stocks could provide some support.
This is even as they expected that after three consecutive weeks of decline in the banking index, the sector would rebound as investors position ahead of major earnings releases from the sector.
The analysts pointed out that Nigeria’s economic outlook for 2025 would be shaped by a delicate balance between short-term vulnerabilities and long-term growth potential, noting that a decline in oil production, which fell to 1.47 mbpd in February, coupled with weaker global oil prices, is exerting significant pressure on oil revenue projections.
According to the researchers, in a base case scenario, this may lead to a notable shortfall in oil revenues, contributing to a wider fiscal gap. The increase in domestic debt is a concern, with rising borrowing costs potentially exacerbating fiscal pressures.
The analysts further clarified: “The rising cost of petrol imports, which surged to an estimated NGN15.42 trillion in 2024, underscores Nigeria’s growing dependency on foreign fuel sources. This is placing further strain on foreign exchange reserves and exerting downward pressure on the naira. Despite recent gains in the naira, the continued depletion of foreign reserves—down by $1.31 billion in February 2025—highlights the risks of external vulnerabilities, especially if oil revenues fail to meet expectations or global economic conditions worsen.
“However, potential inflection points could positively shift the outlook. Strategic transactions, such as Shell’s asset sale to Renaissance Africa Energy Holdings, could enhance operational efficiency and provide a stabilizing boost to production in the short term. While these benefits may be limited without broader diversification efforts, they offer a glimmer of optimism.
“The critical challenge for Nigeria will remain its ability to stabilize the fiscal position and effectively manage”, they added.
On the firm’s stock picks for the week, the experts maintained that ZENITHBANK remained their stock picks for the week, as it continued to trade below our target price, currently fluctuating between N47 and N47.80.
They forecasted: “We anticipate that the upcoming full-year earnings results will drive positive sentiment around the stock, providing a solid foundation for long-term growth. Additionally, when compared to its peers, Zenith Bank offers notable potential for capital appreciation, making it an attractive investment opportunity.”
