Researchers and investment experts at Bancorp Securities Limited, a leading investment research and consulting firm in Nigeria, have projected that the Nigerian Exchange (NGX) broad market sentiments will remain positive amid growing interest of foreign investors in Nigeria based on the President Bola Tinubu’s recent parleys with global stakeholders to attract investments into the country.
The researchers, in the firm’s ‘Weekly Stock Recommendation for Oct 23rd-27th 2023’ report forecasted that the Financial Services and Industrial Good sectors would drive the course of trading in the local bourse while the Consumer Goods and Oil and Gas sectors may close flattish at the end of the week’s trading sessions.
The analysts stated: “This current week, we expect the broad market sentiments to remain positive, boosted by the landmark ventures between Nigeria and the international community in a bid to foster public private partnership and ameliorate the devastating impacts of the diminishing value of its currency.
“The Financial services sector, is projected to significantly direct the course of the bourse in the current week, however it is projected to return flattish save for stronger directional news in the economy. The Industrial Good sector’s strong positive correlation with the performance of the economy is expected to mar its growth potential as the inflation malady exacerbates the revenue earning capacity of constituent issuers.
“The Consumer goods sector alongside the Oil and gas sector may likely return flattish performance as the impetus for growth is pointedly minimal”, they added.
The experts recalled that the bourse closed at the end of the previous week with the NGXASI dropping to 66915.4 points, representing a decline of 0.42% W/W and a stagnated at 30.56% YTD as activities on the NGX remained comparatively minimal, skewed toward a few sectors and stocks.
According to the report, last week the bullish run on UBA made the stock surge 8.26% during the week, whilst topping the volume chart, accounting for an excess of 12.02% of total volume traded during the week while the preceding week increasing interest in THOMAWYATT made the stock to accumulate an average of 274.23% YTD returns, adding that the fundamental nature of this stock, presents viable acquisition opportunity for strategic buyers whom may intend to revamp its operations, even as a host of other interests across the banking sector spurred the banking index to return 3.52% WTD on the bourse.
On a broader outlook of the economy, the firm’s researchers noted that as Oil prices continue to soar, the revenue generating capacity of Nigeria remained appreciable with the Federal Government recording a growth in September 2023 oil earnings of N273.8 billion.
They listed some of the near/ medium term remarkable steps taken by the government and other stakeholders to hedge the downsides of a managed float exchange rate regime as including the $200 million Liquefied Natural Gas, LNG project, with a 405 million tons of LNG & 294 barrels per day of crude condensate capacity, as part of capital expenditures to foster domestication of crude oil by products and limited the nation’s over dependence on importation of such products.
In addition, the researchers also identified another step by the government as the completion of Emzor Pharmaceutical Industries Limited $23 million plant, which is projected to commence operations in Q1 2024 as the plant capacity is designed to produce 200 metric tons of active pharmaceutical ingredients (API) annually, presenting a decent input cost advantage for local drug manufacturers as per importing of finished drug products.
