Operators have expressed optimism that the nation’s bourse will witness positive performance in 2020 due to low interest rate in money market instrument and early passage of the budget.
They stated this in separate interviews with the News Agency of Nigeria in Lagos on Thursday, while reacting to the stock market expectations in 2020.
Ambrose Omordion, the Chief Executive Officer, InvestData Ltd., said low interest rate regime, increased credit to the real sector and early assent to 2020 budget were factors that would impact positively on the market.
“The market in 2020 looks promising as factors that will shape the economy and stock market are on the increase in spite of the continuous downgrade by rating agencies,” Mr Omordion said.
He stated that early implementation of capital expenditure would have multiplier effect on the economy.
According to him, regulatory initiatives and policies such as the Central Bank of Nigeria, CBN, Treasury Bills (TBs) and Open Market Operation restrictions will encourage local and institutional investors’ sentiment to the equity market.
He noted that the exchange new free float rule expected to commence on Jan. 2, 2020 would improve market liquidity and transparency, thereby impacting positively on the market.
On sectors to watch out in 2020, Omordion said that financial, consumer goods, building materials, telecomms/ICT would be the most sought by investors.
“The financial sector is more marketable, consistent in dividend payout and if the economy finds its feet in 2020, the banks will benefit more,” Omordion said.
He noted that low price attraction of consumer goods stocks due to huge losses suffered in 2019 would make the sector attractive.
Omordion added that low interest rate on consumption would boost the industry earnings, noting that mobile licence would boost telecoms sector’s profitability.
Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., said that 2020 would be a better year for the Nigerian stock market.
“The past two consecutive years recorded loss in two digits 18 per cent and 16 per cent for 2018 and 2019, indicating a decline of 34 per cent in two years.
“The crash of interest rate in the money market instrument from 15 per cent to about seven per cent or less makes money market returns negative compared with inflation of about 12 per cent,” Mr Kurfi said.
Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, said that stock market performance would be determined by the nation’s economic activities.
Mr Okezie said that economic managers must pursue friendly policies to boost investors’ confidence in the stock market and economy in general.
The shareholder activist said that price of oil in the international market, security situation and adherence to rule of law were factors that would shape stock market activities in the coming year.
According to him, government must improve in adherence to the rule of law in order to bring in foreign investors into the country.
Mr Okezie also urged government to address multiple tax regime affecting the growth and development of the manufacturing sector.