Investment experts at Bancorp Securities Limited, one of the leading investment research and consulting services firms in Nigeria, have predicted that trading sessions in the Nigerian Exchange (NGX) will elicit flattish investor sentiments, amidst an appreciable risk averse intensity on share price on the bourse.
The researchers, in the firm’s Weekly Stock Recommendation May 13 to May 17, 2024’ released on Monday, however, pointed out that the expectation of higher policy rates would be dovish on the price outlook on the broad market, with core impact areas on consumer goods and banking stocks.
According to the experts, the provided summary of the projected performance of the local bourse is predicated upon the prevailing news trends expected in the upcoming weeks.
They recalled that recently, the IMF had made dovish commentaries surrounding the prospects of the Nigerian economy as it related to supply side inflation and social welfare, summarily, including the potential reintroduction of gasoline subsidies in Nigeria is causing concerns regarding their impact on oil revenue, with estimates indicating they could use up almost half of the projected revenue for the year. Similarly, they noted that the IMF foresaw a gradual elimination of the subsidy over the next two years, while the government expands its cash transfer program to support the most vulnerable segments of society in order to preserve price stability and preventing social unrest.
This is even as they pointed out that concern had arisen regarding the weakening of the Nigerian naira, which had reached NGN1,466.31 per US dollar last Friday, adding that the decline is linked to a scarcity of US currency in the local market, with only $608.50 million traded through the week.
Expatiating further on the outlook of the economy, the analysts stated that additionally, there were worries about the impact of $1.3 billion worth of maturing naira futures by the end of May 2024, which is expected to exacerbate the prevailing market sentiment.
