A frontline capital market operator Capital Bancorp Plc, has projected 25 per cent returns for the Nigerian stock market in 2018, considering ample opportunities in some stocks in the banking, consumer goods and the industrial goods sectors of the equities market.
While identifying critical factors that will boost performance of the Nation’s stock market this year for enhanced competitiveness, the company in its “Economic Review and Outlook For 2018” also noted some headwinds that can moderate the market performance in the period, unless they are managed.
The Managing Director of the firm, Higo Aigboje, while addressing Journalists in Lagos, said NSE’s performance boosters for the year include stability of oil prices, effective management and improved liquidity of the Foreign Exchange market, improvement on the corporate earnings, significant focus on the non-oil sector to increase output and lower interest rate regime.`
Others are effective synergy in the use of fiscal and monetary policies, Government’s focus on the real sector, improved market participation by local Investors and domestic institutional Investors and efficient market regulation.”
He further stressed the need for speedy unbundling of Nigerian National Petroleum Corporation and listing of emerging companies, urging Government to also intensify efforts at encouraging more multinationals, telecommunications, Oil and Gas to list stock in the market.
The Nation’s investment and confidence in shares significantly improved in 2017, given the improved Investor sentiments towards the Nigerian economy.
Significant improvement in corporate earnings for companies listed on the stock market also drove investment back to the market, even as Foreign Portfolio Investors (FPI) came back into the country on the back of a more stable and predictable Foreign Exchange market.
He noted that market capitalisation rose by 47 per cent in 2017 to N13.62 Trillion against N9.26 Trillion posted in 2016, adding that CBN policies increased liquidity in the Foreign Exchange market.
Aigboje, however, submitted that issues such as sudden rise in insecurity and political instability owing to forthcoming general elections, sudden reversal in oil prices, an upturn in the yields of fixed income securities and failure in the banking sector can trigger exit of FPI, leading to sell-off and cause further damage to the entire stock market.
He therefore, urged both indigenous and foreign and potential investors to leverage the company’s review of the global and Nigeria’s financial markets to expand their knowledge of the stock market and make appropriate investment decisions.
The company’s Chief Analyst, Victor Chiazor, also projected that the global economic growth would hit 3.5 per cent this year as against 3.1 percent last year.
He argued that global oil prices have gradually risen over the last year leading to a significant revenue increase in many oil exporting Nations, while consumers in many importing countries will have to pay more to heat their homes or drive their cars.
This increase, according to him has the underlining effect on various areas of the economy; Government revenue, interest rates, exchange rates and oil consuming economies.