At a time many fear that returns on investments in the Nigerian Stock Exchange (NSE) could close flat or even negative in 2018, with preparations for the 2019 electioneering expected to reach frenzied pitch, Alhaji Kasimu Garba Kurfi, chief executive of APT Securities & Funds Limited believes investors would still have course to celebrate by end of next year.
Speaking after the annual general meeting of APT Securities, where shareholders reviewed its performance for 2015 and 2016, Alhaji Kurfi recalled that it was only in June this year that the NSE indicators started becoming robust, helped by the Central Bank of Nigeria’s opening of the investors and exporters’ window of the inter-bank foreign exchange market on April 21.
Fresh from recession which ended with the release of the nation’s Q2 GDP data by the National Bureau of Statistics, the market is today one of Africa’s best performing with a return of 36.25% at the midweek (November 15, 2017), after attaining an all-year high, though intra-day, of 38,241.67 on August 14, 2017, representing 42.29% returns on investment.
“The slowdown being witnessed in the economy at the moment, he continued, is a combination of so many factors… During the recession, there was not much foreign exchange inflow, but with the increase in oil price at the international market (now above the budget benchmark) and production output hovering around 1.8 and above two million barrels per day, it means there is more revenue accruing to the country and the economy will be better, writing off whatever expected negative effects of the election year.”
Such effects, he continued, include foreign investors selling down ahead of the election year to reduce their exposure.
On the issue of politicians also exiting the market to use their funds for electioneering, the APT boss wondered how many politicians in Nigeria invest in, or play the capital market which has always too complex for many to understand and appreciate.
The uncertainties of the election year, he added, may not be as pronounced as it was before.
“If foreign investors sell their stake, it may not be like in previous election years.
“The most important factor is fundamentals (of particular stocks and the market in general), because most stocks are trading are trading below Book Value, which makes them attractive.”
With the interplay of all these factors, economic activities would improve by the day, he stressed, following which “things can only be better in 2018, notwithstanding the election year” he enthused, pointing to the ongoing plans by telecommunications giant- MTN to list its Nigerian arm on the NSE, a situation he says would significantly boost the All-Share index of the market.
“The most fundamental consideration (for investors, both foreign and domestic) is the economy. We just got out of recession (in June), which means we are starting afresh. So the 2018 year will be better,” Kurfi stressed.
Specifically, he said performance of APT Securities & Funds at the end of 2016 was a reflection of the Nigerian economy in recession, which negatively impacted the investment horizon.
The company reported gross income of N1.41bn, as against the previous year’s N1.411bn; profit before tax fell by N231.79m or 59.77%. Tax was down to N20m, from N99.235m, following which net profit stood at N135.943m, dropping by 52.88% from N288.509m recorded in 2015, which was blamed on the significant rise in operating costs.
He assured the company’s investors of a more robust 2017 and 2018 performance, expressing sadness over the inability of the board to declare a dividend from the Earnings Per Share, a situation he assured would change by next AGM.
Reasons for the better outlook, he said, include the fact that most subsidiaries of APT Securities & Funds Limited do not operate in the capital market, but other segments of the nation’s financial markets such as pension funding administration and bureau de change where they are doing well.
Also, “we are likely to reopen branches (in towns where we previously had presence) as the economy improves,” he added, assuring that the board is also working on a succession plan.