Investment experts at Bancorp Securities Limited, one of Nigeria’s frontline investment research and consulting services firms, have projected that the Nigerian equities market would maintain a mixed trading pattern this week, based on local macroeconomic pressures and global developments.
The analysts, who made this forecast in the firm’s ‘Weekly Stock Recommendation for Jan 20- Jan 24 2025’ Note circulated to our correspondent on Monday, predicted that while global events continue to impact the market, attention would remain on how these external factors affect the Nigerian market.
They projected: “We foresee some buying pressure in the Consumer Goods and Industrial Goods sectors as investors position themselves during dips in high-cap stocks. Additionally, the Banking sector is likely to see increased activity due to new share listings and a clearer direction on future capital-raising strategies.”
According to the experts, based on the outlook and implications on the economy and markets, food inflation in Nigeria is expected to remain high in Q1 2025, driven by structural challenges such as agricultural constraints, exchange rate volatility, and high input costs.
However, as a buffer to the shocks, the investment researchers foresee that while falling global food prices and improved supply chains could provide some relief, the effects will be limited without effective policy intervention.
On inflation rate, they predicted that post-holiday spending, school fees, and the rebasing of the CPI may lead to a marginal decline or stabilization in inflation, adding that over the medium term (H1 2025), inflation could slow if harvests improve and government policies are effective, though structural challenges remain a risk.
The analysts further clarified: “Nigeria’s macroeconomic indicators reveal a fragile balance, marked by declining foreign reserves, persistent inflation, and an aggressive borrowing strategy. These factors underscore the importance of implementing fiscal reforms and maintaining discipline to ensure sustainable recovery and growth. If these vulnerabilities are addressed, the country could experience more stable economic conditions.
“The Nigerian consumer goods sector is expected to remain resilient, achieving double-digit revenue growth through strategic price adjustments and capacity expansions. While elevated inflation will sustain demand for essentials, ongoing cost pressures from high raw material prices and constrained consumer spending may limit volume growth.
“However, easing currency depreciation and moderated borrowing costs should alleviate some financial pressures, positioning companies with strong pricing power and cost efficiencies to outperform in a challenging macroeconomic environment”, they added.
On monetary policy expectations, the experts forecasted that with inflation expected to ease in January, the Monetary Policy Committee of the Central Bank of Nigeria (CBN) would likely take a cautious approach in its upcoming meeting.
Specifically, they projected that rather than implementing aggressive policy changes, the committee would likely adopt a wait-and-see strategy, closely monitoring inflation trends before deciding on its next course of action on monetary policy thrusts.
