Analysts Review Low-Interest Rate Regime, Border Closure, 2020 Budget On Equity Market Outlook

Analysts and traders in the Nigerian capital market, at the weekend, undertook a review of activities in the nation’s economy, especially as they affected the investment horizon in the outgoing year, and concluded that the year 2020 holds a lot of promise for equity investors and traders, especially given the cocktail of regulations expected to drive investment towards that segment.

The analysts, who spoke during this year’s edition of the INVEST 2020 traders and investors summit, organized by Investdata Consulting Limited in Lagos, with the theme: “Opportunities and Trade Ideas,” looked at the possible impact of dynamics like the relatively low-interest rate, border closure, early assent to 2020 budget, low valuations of companies base on their fundamentals and the banks implementing the 65% LDR at the end of the year on the economy and equity prices.

The speakers discussed the expected impact of the various initiatives and opportunities they offer investors in various sectors of the economy and how investors should position to take advantage of the current low prices of equities in the Nigerian market.

They also noted the quest for strategies to improve revenue through taxation, attract Foreign Direct Investment (FDI) as a major focus of the Federal Government, which will indirectly increase liquidity around the market arena, thereby enhancing portfolio value.

Engr. Ekwueme Mike Anyadibe, Head, Fixed Income Sales at TRW Stockbrokers Limited, for example, took participants through trade ideas that support their different investment goals. He harped on the implication of the expected bear-run in the fixed income market occasioned by the Central Bank of Nigeria’s recent directive in Q1 2020.

AbdulRasheedOshomaMomoh, Head, Capital Market, also of TRW Stockbrokers Limited spoke of the need to be guided by technical analysis tools, describing chart pattern that signaled when to buy or sell any assets for traders or investors at any level.AlhajiGarbaKurfi, Managing Director of APT Securities & Funds Limited, shared the five strategies of picking stocks in recession or boom and identifying investment ideas through top to down approach, always look at companies that are selling all-time low and jump in with long term investment objective in view as many stocks are selling five to ten years low.

Commenting on the summit, Ambrose Omodion, Chief Research Officer, InvestData Consulting, said “the purpose and focus of the conference were to expose the participants to existing opportunities and risks in the nation’s financial market after the different investment windows had suffered setbacks and some provided bullish investment environment.

“The fixed income and money market instrument, before now, have been investors’ toast, as a result, high yields and rates at the expense of real economic growth which has led to many companies struggling with the high cost of operations, eating deep into their profit, and did not support their share prices, in addition to other militating factors.

“But, with the changing regulatory regime which has triggered the ongoing capital wave in the financial market, it is expected that funds will flow to investment windows with higher returns where risk is calculable,” he stressed.

Participants also discussed the usual Investdata’s 10 golden investment and trade ideas for 2020, with reasons to support the opportunities such as dividend yields and earnings expectations, improved earnings and high payout. Others include the capacity to drive earnings, positive sentiments and consistent dividend payout, low price attraction, and sentiments, the impact of backward integration, as well as impact of restructuring and dividend, among others.