According to Comercio Partners, an investment banking firm, they have urged investors to adopt a cautious approach in the second half of the year and focus on sectors that are expected to drive the economy. The firm’s co-Managing Partner, Steve Osho, provided a review of the first half of the year and shared the outlook for the second half.
In the first half of the year, the Nigerian stock market demonstrated resilience despite macroeconomic challenges and election anxieties. It reached its highest index point in 16 years at 66,381.20, making it the best performing stock market in Sub-Saharan Africa. Additionally, there were developments in the exchange rate policy, with increased flexibility and a closer alignment between the I&E official window and the parallel market trading.
Looking ahead to the second half of the year, Osho highlighted that the direction of the economy would depend on ministerial appointments, as well as forthcoming monetary and fiscal policies. The sustainability of fuel subsidy removal, liberalization of the foreign exchange market, and the revision of the minimum wage were identified as significant factors that would shape the economic trajectory.
Regarding the financial markets, Osho predicted a positive performance with increased participation from foreign portfolio investors. He expected bullish sentiments in the fixed-income markets in the near term due to buoyant system liquidity. However, cautionary sentiments may arise later in the year as foreign portfolio investors’ participation is closely observed, potentially leading to upward trends in yields to attract foreign portfolio investments. In the local stock market, Osho anticipated a continued upward trajectory in the benchmark All-Share Index driven by investor anticipation of impressive financial performance from banks following the unification of foreign exchange rates.
Osho advised investors to be cautious in the weak macroeconomic environment and only invest in fundamentally strong stocks. He emphasized the importance of developing sound investment strategies, conducting thorough research, and diversifying portfolios. Remaining informed about market trends and seeking professional guidance were recommended to navigate potential risks and identify promising opportunities. Osho also suggested structuring portfolios around sectors such as technology, renewable energy, power, gas, and goods and services, which are expected to be important drivers of the economy.
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