….forecast retention of benchmark lending rate, others
Investment experts at Bancorp Securities Limited, one of the nation’s investment research and consulting services firms, have predicted that trading in the nation’s equities market will retain last week’s momentum as the Central Bank of Nigeria’s (CBN’s) Monetary Policy Committee (MPC) is set to review the key monetary rates on Tuesday.
The experts, in the firm’s ‘Stock Recommendations For The Week: July 24 –July 28 2023’ report sourced by our correspondent, stated that as the decisions of the MPR were being awaited, they opined that there would be a stay or reduction in the monetary policy rates (MPR).
The analysts stated that their views were hinged on the recent President Bola Tinubu-led administration’s policy reviews which include the eradication of multiple exchange rates, which if managed properly, would enhance the strength of the Naira; the reduction of Federal government budgets in certain sectors, which presumably would free up revenue for capital expenditure and amplify its multiplier effect on development; and reduction in treasury bill spot rates in the money market pointing to a bearish outlook on this administration low-debt, high-expenditure fiscal model, amongst others.
The investment experts further stated: “It goes to reason that the pivotal role of the monetary policy rates to the enhancement of economic activity is very key. In a cost laden inflationary environment, access to short term and long-term financing for companies is crucial to reducing inflation.
“The equities market is expected to respond positively to a stay or a hike in the MPR, and vice versa except for stronger directional news during the week”, they added.
The firm’s researchers recalled that last week, the market’s momentum was rejuvenated on euphoria towards imminent release of Q2 results which resulted in the NGXASI gaining 26.83% YTD and 3.89% WoW to close at 65,003.39 points, whilst market capitalization settled at NGN35.395 trillion at the close of last Friday’s trading session.
Additionally, they also attributed the predominant positive momentum to other factors such as the share buyback programme in Dangote Cement, the positive sentiments in the Banking sector, and investors’ anxiety towards the MPC meeting.
On their recommendations on shares this week, the investment experts recommended NESTLE for buy by investors in view of the stock’s good fundamentals but advised them to maintain a hold on investment in LAFARGE (WAPCO) and NIGERIAN BREWERIES, both blue chip stocks, in view of the prevailing fiscal and macroeconomic indices.
According to them, the recommendation on LAFARGE was based on the management’s projection in 2023 in which they expected good demand momentum of the stock and the plans to continue to maximize volume opportunities across its markets and actively manage its costs.
Also the researchers expected that once macroeconomic environment remained stabilized enough as it relates to inflation and foreign exchange, the NIGERIAN BREWERIES stock will be a good entry point for investment.
