Researchers at Bancorp Securities Limited, a leading stockbroking and investment consulting firm in Nigeria, have predicted that the Nigerian equities market would likely trend in cautious optimism in the coming week, with sectoral shifts driven by inflation trends, oil price fluctuations, and corporate earnings.
The experts, in the firm’s ‘Weekly Stock Recommendation for January 13-17 2025’ circulated to our correspondent on Monday, pointed out that while banking stocks may sustain continued strength, consumer-driven sectors could face more challenges.
In their advisory, the analysts charged investors to remain vigilant, balancing growth opportunities with caution, especially in light of the rebased GDP and inflation data and the broader economic headwinds.
Hinging their forecast on the local bourse current micro and macroeconomic indices of the broader economy, the investment researchers further clarified: “The GDP rebasing will likely expand the economy’s nominal size, improving metrics such as debt-to-GDP and tax-to-GDP, which may influence Nigeria’s fiscal narrative and borrowing capacity. However, a larger GDP does not equate to improved fiscal health, as revenue generation remains weak.
“Investors should watch for policy shifts following this rebase, as it could prompt adjustments in fiscal strategy, debt issuance, or tax reforms. The inflation rebase could lead to a more balanced inflation reading, with reduced sensitivity to food prices but higher weightings for transport and hospitality. This might shift consumer and investor sentiment, especially in sectors sensitive to price changes.
“We expect Inflation report for Dec’24 this week, as this report won’t be affected by the new rebased policy, we expect the report to end the year in an upward trend driven by the impact of panic buying and festive season pressure”, the firm’s experts added.
Oil and Gas expectation in the equities market, they maintained that Oil prices remained a significant driver, and despite deregulation efforts, the sector will likely remain volatile, adding that upstream and midstream companies, such as SEPLAT and ARADEL, could benefit from deregulation and reduced reliance on fuel imports, bolstering their prospects.
However, the experts cautioned that downstream players like TOTAL and CONOIL may face challenges due to high import costs and continued foreign exchange (FX) pressure.
They concluded that investors should expect a cautious outlook with select opportunities for companies poised to capitalize on deregulation-driven margins.
