CEM REPORT, MARKET | With the Nigerian Equities Market experiencing positive momentum, analysts have predicted that such will be the flow through the year.
The Exchange which has been in an impressive positive form for three years and counting, analysts say will be sustained on the premise of bullish sentiment expected in Q1 to be buoyed by investors positioning ahead of 2022 full-year corporate disclosures and possible re-investment of dividends earned.
Analysts at Investment One Research stated this in their 2023 microcosmic and financial market outlook report tagged ‘Unboxing the New Realities’.
The analysts added that another eventful factor that should buoy sentiments in the market was Dangote Cement Plc’s share buyback of up to 1,687,355,925 (10%) of its issued shares which has been unanimously approved by the shareholders at the last Extra-ordinary General Meeting (EGM) held in December 2022.
They explained that further into the year, the direction of market performance will be largely determined by the trio impact of fixed income yields in tandem with monetary policy, corporate actions, and election turnouts.
“Ditto to our outlook of tepid movement in yields in the fixed income space and expectations of a less aggressive hawkish tone from the CBN, negative real returns should remain relatively high in the fixed income space giving room for alpha-seeking investors diverting more funds to equities as it remains a solid channel for positive real returns.”
Furthermore, they expressed optimism over a positive earnings performance in 2023 as regards corporate earnings, amidst the negative impact of high inflation pressures, increased monetary policy tightening and FX instability.
“Although we expect a broad-based resilient performance, we do not see a significantly upbeat performance as the aforementioned factors remain deterrents.”
However, they noted that election jitters and heightened political risk in 2023 are key factors that will influence investors’ sentiments towards the equities market, particularly considering that it is an election that would herald a change of the presidential baton.
“Considering the “do or die” nature of election affairs in Nigeria and the instability that comes with policy enactments and reforms as well as the uncertainty of a peaceful post-election season, equity investors tend to take a standoffish position towards the market as they take a flight to safe havens.