Experts project 3.02% increase in equities market, others

• Published date: 15 January 2023
• Publication title: Nigeria - The Nation

Experts at Quodros Asset Management Limited have revealed in their economic outlook for 2023 that, Nigerian equities market will be positive, economic growth will increase by 3.02% while there will be inflationary pressures and asset volatility in Nigeria's domestic economic.

The experts expect the performance of the Nigerian equities market to be positive in H1-23 following investors' positioning for 2022FY results ahead of positive corporate earnings and re-investment of dividends amid higher yields in the fixed-income market.'

In the bear case scenario, they said that, the assumption is that a combination of a higher-than-anticipated uptick in yields in the FI market, significantly weaker earnings and dividend pay-outs, and a sudden violent turn in the 2023 election will drive apathy for stocks. ASI currently trades at a P/E of 9.5x, a 7.7% discount to its 5-year average of 15.5x, and a 27.7% discount to the frontier market peers - MSCI FM (13.3x).

One of the experts who is also the Head, Research and Strategy Jolomi Odonghanro, while making a presentation with theme: 'FY - 23 Outlook: Chart Through a Pervasive Slowdown,' recently in Lagos disclosed that, 2023FY forecasts headline inflation (base case): PMS prices rise to NGN250.00/litre; currency depreciates to NGN455.00/USD at the IEW; 10.5% electricity tariff hike18.56% y/y (2023FY average) 18.01% y/y (December 2023) headline inflation.

For bull case, he stressed that, PMS prices remain at NGN190.00/litre; currency remains stable at NGN445.00/USD at the IEW; no progressive hike in electricity tariff17.70% y/y (2023FY average)15.80% y/y (December 2023) adding that, Headline inflation bear case: PMS prices rise to NGN420.00; currency depreciates to NGN465.00/USD at the IEW; 20.5% electricity tariff hike20.99% y/y (2023FY average) 25.35% y/y (December 2023)

According to him, 'the naira remained pressured against the US Dollar, given the limited FX supply at the official windows amid increased FX demand. The average monthly inflows into the IEW in 10M-22 settled at USD1.20 billion - 58.6% lower than the average monthly inflows in 2019FY (USD2.90 billion). FX liquidity conditions at the IEW remained low as FPIs remained on the sidelines given a lack of reforms in the FX framework, higher global interest rates, and weak macroeconomic narratives.'

'H1-23 monthly projections CBN's oil inflows: USD706.32 million monthly average (+6.7% y/y; H1-22: USD661.88 million)Non-oil inflows: USD2.16 billion (4.1% y/y; H1-22...