Analysts at Afrinvest Limited, an independent investment banking firm with a focus on West Africa, have identified the four major elements that will propel the Nigerian stock market in 2019.
The analysts, who anticipate a better performance for the Nigerian Stock Exchange in 2019, said the four major factors that will determine this are- post-election, new listings, macroeconomic indicators and corporate earnings.
Analysts at the investment banking firm noted that before 2018, foreign investors have been the key players in the Nigerian stock market. However, as a result of the pulling out of foreign investors from the local market, local investors have contributed immensely.
According to Afrinvest, “in 2019, we expect foreign investors to return to the Nigerian market after the conclusion of the elections and as such anticipate an improvement in performance. Furthermore, given current pricing of the market, which we believe is attractive, even more attractive in dollar terms, we expect foreign investors to take advantage of this whilst domestic investors will react accordingly”.
Speaking on new listings, the analysts said that given the sustained drive to increase product offerings in the market by regulators, coupled with the expected improvement in sentiment, they anticipate some new listings either by way of rights or Initial Public Offering (IPO) in 2019.
While addressing macroeconomic indicators, they said factors including oil prices, external reserves and FX liquidity would remain major considerations for investors in 2019 and the outlook on these indicators remain largely positive and should support market activity.
The analysts revealed that after the conclusion of the elections, investors would place a premium on investment decisions based on fundamental analysis of companies as opposed to speculative trading.
Further explaining the effect of corporate earnings on the performance of the Nigerian Stock Exchange this year, Afrinvest said “we believe that performance of corporates will be a major consideration in 2019. Our expectation for corporates’ performances varies across sectors, with our optimistic expectations tilted towards the Banking sector, especially the Tier-1 players that have historically demonstrated resilience amidst tougher operating conditions”.
They added that “we also anticipate improved performances from Consumer Goods companies –as economic conditions improve, and Oil & Gas companies, as earnings are projected to be buoyed by increased oil production and prices”.
Afrinvest Limited is active in four principal areas: investment banking, securities trading, asset management, and investment research. The independent banking firm is regulated by the Securities and Exchange Commission (SEC) as an Issuing House and Underwriter.