Morgan Capital Securities Ltd. has projected that investments in equities across banking, consumer and industrial goods and other sectors would drive the performance of the Nigerian stock market in 2023 with a yield upwards of 25 per cent. The company’s Managing Director, Mr Dipo Olomofe, said this in an interview with the News Agency of Nigeria on Friday in Lagos. NAN reports that Morgan Capital Securities Ltd. offers banking and financial advisory services, stock broking, issuances, capital raise, investment portfolios, among others. Olomofe said his projection was based on the bearish performance of the stock market at about 16 per cent and current price levels of equities, partly due electioneering ahead of next year’s general elections. He stated that upon political stability after the 2023 general elections, investments in companies with strong fundamentals must experience capital appreciation and dividend returns. He noted that global and local headwinds, the Russian Ukraine war, increased Monetary Policy Rate MPR, was currently affecting all sectors.
As a result, Olomofe said equity assets were under pressure with most of the assets currently underpriced. “This period is a good entry point for investors due to the bottom fishing principles. This is the time to come in, buy now and be sure of capital appreciation upwards of 25 per cent post election in companies whose books have strong fundamentals such as banks and other blue chip companies. So, you are sure that if you invest now that the prices are low, after election, once there is a better and certain direction for the company, equity would be boosted, Foreign Direct Investment FDI, would return seeing that the country’s political terrain has been de-risked,” he said. Olomofe, also a fellow chartered accountant, suggested investments in fixed income, real estate and mutual fund to hedge against inflation and foreign exchange risks.
He said this was important because of the performance of the Naira in the parallel market due to the country’s depreciated foreign exchange earnings from lower oil exports and crude oil theft. “We are saying that people should invest in dollar denominated instruments seeing that the value of the Naira has dropped in the parallel market and the country is not earning enough foreign exchange to defend the Naira. Even though the Central Bank of Nigeria has brought measures to keep the foreign exchange in-house, the projection is that with the current exchange rate in the parallel market, depreciation would continue,” he said. Olomofe charged businesses in the Micro, Small and Medium Enterprises space to embrace investments in the capital market. He urged investors to take advantage of the company’s iTrade platform that offered investors and buyers the opportunity to trade shares transparently via the NGX. The same way you buy car or a tangible asset is the same way you can buy financial assets such as equity in the capital market. This affords you the opportunity to be part owners of a company you buy shares in,” explained Olomofe.
Speaking on the 2023 budget, he noted that the country’s budget provided direction for the economy with regards to earnings, assets, sales and expenditure, but that activities of government by way of deficit financing impacted the capital markets. He said government’s efforts to finance the budget deficit included the use of debts, treasury bills, and other tools provided opportunities for investors in the face of increased MPR. This, he explained, would earn investors both their capitals and interests or coupons.
