Investment researchers at Bancorp Securities Limited, one of the leading investment research and consulting services providers in Nigeria, on Monday forecasted a flattish return on Nigerian Exchange broad performance this week as investors begin to position early in anticipation of the outcome of the Central Bank of Nigeria (CBN) Monetary Policy Committee’s meeting scheduled for September 26 2023.
In the firm’s ‘Weekly Stock Recommendations: Sep 18 – Sep 22 2023’ circulated to our correspondent, the experts stated that they expected the Banking index to depreciate and that during the trading sessions this week insurance index is likely to benefit from portfolio divestments and that release of half year results by some listed entities could justify momentum in the respective stocks.
They projected: “This current week, we expect the broad market performance to return flattish, as investors position early enough in anticipation of the outcome of the September 26 2023, MPC meeting.
“The Banking index is expected to close down, amidst profit taking activities mostly in high cap. stocks. The insurance index is likely to benefit from portfolio divestments, as it offers relatedly cheaper stocks with fair earnings potential. More half year results are expected to be released to the public, which could justify momentum in the respective stocks”, the experts added.
Also, the investment researchers noted that this week, the scheduled downgrade of Nigeria under the FTSE country classification indices would be implemented on Monday with the attendant likely negative implications for the local bourse’s performance.
They listed some of the effects of the downgrading as including erosion of investor confidence (especially foreign investors) in the capital market, and bearish predominance of the market in the near term, as it is expected that there would be massive divestment of buy side investors into fixed income securities.
On the remedial actions expected from the Nigerian government to ameliorate the downsides of downgrade, the experts advised the government to implement a more transparent fiscal policy bordering around curbing the menace of crude oil and solid minerals theft in view of the negative impacts on the public finance system.
Similarly, the Bancorp Securities’ analysts called on the government to stimulate the domestic economy by re-enacting similar but laddered COVID-19 ameliorating economic policies to reverse the downward trend in the local bourse, amongst others.
