Investment analysts at Bancorp Securities Limited, a leading investment research and consultancy services provider in Nigeria, have predicted that the uptick that characterized trading in the Nigerian equities market for most of the trading sessions over the past weeks would be sustained this week.
The experts, in the firm’s ‘Weekly Stock Recommendation: 12th -16th May 2025’ Note circulated to our correspondent on Monday, maintained that Following three consecutive weeks of gains, they expected the Nigerian equities market to enter a consolidation phase this week, as investors digest recent price movements and adopt a more cautious stance.
According to the researchers, while sentiment remains broadly positive, it has largely been driven by the Q1 earnings reported so far.
They pointed out that Investor attention was also expected to shift beyond earnings, with a focus on the upcoming inflation report, which will be closely watched ahead of the next Monetary Policy Rate (MPR) decision.
- Advertisement -
Additionally, the investment experts predicted that developments around the DMO’s proposed Sukuk bond issuance may influence sentiment and liquidity positioning, particularly among fixed-income–oriented investors.
Overall, they anticipated that the equities market would likely remain earnings-led but cautious, with more selective buying expected.
On the recent policy reforms by the government and the outlook and implications for the economy and markets, the researchers noted that the recent fiscal developments, including the Senate’s passage of reform bills and the full repayment of Nigeria’s IMF COVID-19 loan, signalled a shift toward greater fiscal discipline and institutional reform.
According to them, these actions suggest that the government is prioritizing revenue modernization, debt sustainability, and credibility in policy execution while the creation of a new Nigeria Revenue Service and a Joint Revenue Board sets the foundation for a more efficient and unified tax administration system.
The analysts projected that if effectively implemented, this could reduce overlaps in tax collection, enhance compliance, and simplify the tax landscape for businesses, particularly SMEs, adding that the decision to retain VAT at 7.5% supports consumer spending and offers cost relief to businesses already pressured by inflation, and that allowing input VAT claims on capital and overhead costs may improve corporate liquidity and incentivize investment, particularly in capital-intensive sectors.
The firm’s investment researchers also pointed out that the IMF’s confirmation of Nigeria’s full repayment of the $3.4 billion loan strengthened the country’s external debt position and reinforced its financial credibility on the global stage.
They predicted: “While SDR-related charges will continue in the near term, they remain modest and manageable. This development may enhance Nigeria’s access to concessional financing and improve its attractiveness to foreign investors, especially in the sovereign debt market.
“Across sectors, these reforms could create tailwinds for manufacturing, trade, and services by improving the predictability and efficiency of the business environment”, they added.
On Power Sector expectations, the expert noted that the recent ratification of the National Integrated Electricity Policy marked a significant step in Nigeria’s effort to overhaul its power sector, targeting $122.2 billion in investments through 2045. The plan aims to diversify energy sources, improve transmission infrastructure, and provide a more bankable framework for private participation.
In addition, they maintained that for listed operators like Transcorp Power and Geregu Power, the policy presented a long-term positive signal.
They further projected: “While activity around these names has remained muted so far, the market may begin to reprice their prospects as implementation progresses. With $192 million allocated over the next five years to upgrade transmission capacity, we believe this policy could serve as a re-rating catalyst for fundamentally strong players over the medium term.”
