Investment experts at Bancorp Securities Limited, a leading Nigerian stockbroking and investment consulting services firm have expressed optimism that the nation’s capital market holds good return promises for investors this week given the prevailing micro and macroeconomic indices in the economy.
The researchers, in the firm’s ‘Weekly Stock Recommendation for June 3 to June 2024’ report sourced by our correspondent on Monday, maintained that the domestic market in Nigeria saw several significant fiscal developments aimed at stabilizing foreign exchange volatility and cushioning the economic impact of subsidy removal in the past few days.
Specifically, they listed such fiscal developments as including the approval by the World Bank Group of a $500 million loan to the Federal Government aimed at improving the performance of DisCos, noting that the loan will support bulk meter procurement, implementation of a Data Aggregation Platform (DAP), and governance enhancements, with $345 million allocated for Programme for Results (PforR) and $155 million for Investment Project Financing (IPF).
In addition, the analysts noted that the Nigerian government inaugurated a 5.2 million standard cubic feet per day (mmscfd) CNG plant in Lagos to provide alternative fuel sources and alleviate the impact of fuel subsidy removal as part of efforts to promote affordable and sustainable energy, with interest from a Chinese company to invest in CNG-powered vehicles and establish natural gas refueling stations in Nigeria, supporting the transition to cleaner energy.
According to the Bancorp Securities’ experts, the investments in Nigeria’s electricity and CNG infrastructure aim to mitigate price volatility and inflation exacerbated by the 2023 petrol subsidy removal as the fossil fuel-dependent transportation sector has been negatively impacted, prompting the government to pursue expansionary policies.
They listed the policies as exempting manufacturing and small firms from withholding tax, alongside other initiatives, to stabilize the economy amid multinational divestments.
Based on these sundry measures and the potential impact on the investment space, the experts projected: “From the foregoing, we anticipate positive returns on the domestic bourse in the current week, precipitated by extended low prices and improving macroeconomic outlook, with particular reference to H2 2024. We expect sustained momentum on banking and insurance stocks with strong operational performances in its recent financial results.”
