Investment experts at Bancorp Securities Limited, a leading investment research and consulting services firm in Nigeria, have projected that trading in the Nigerian Exchange (NGX) will be upbeat this week as investors are warming up for dividend yields and other investment expectations.
The experts, in the firm’s ‘Weekly Stock Recommendation: Mar 18-Mar 22 2024’ report sourced by our correspondent on Monday, noted that in the just concluded week, pivotal macroeconomic data released by the NBS underscored the fiscal policy initiative in hedging the declining standard of living in the domestic economy.
They listed the data as including the February 2024 inflation which surged to 31.70% year-on-year due to FX volatility and scarcity, along with declining food supply, pushing food inflation to 37.92%; and Q4 2023, VAT collection, which increased by 26.61% to N1.20 trillion compared to Q3, while CIT declined by -35.40% quarter-on-quarter to N1.13 trillion and that the trend reflected a boost in ‘retail’ economic activity, mirrored by Q4 2023 real GDP growth of 3.46%.
According to the researchers, the increase in Value Added Tax (VAT) in Q3 is anticipated to strengthen tax inclusion further, particularly with the implementation of technology-driven approaches under IFRS, enabling better capture of economic activity.
However, they noted that on the other hand the decline in Company Income Tax (CIT) reflected industry challenges, signaling reduced consumer and investment activity in the domestic economy.
In response to the development, the experts forecasted that apex banks were expected to pursue recapitalization efforts to bolster the banking sector’s financing capacity, aligning with broader economic goals, including inflation management and aspirations for a USD1 trillion economy.
On the local bourse’s outlook this week, the experts predicted: “The upcoming week in the stock market is anticipated to be positive, marked by minor price corrections across various sectors.
“Investors are preparing for FY 2023 earnings releases and are particularly focused on corporate action announcements, especially within the banking sector stocks known for their significant liquidity impact on the market”, the firm’s experts added.
