Positive corporate earnings outlook to drive equities' returns

• Published date: 20 January 2023
• Publication title: Nigeria - The Nation

Major companies across the key sectors of the Nigerian economy will sustain steady growths in 2023 and resultant results will drive the equities market to its fourth consecutive positive return.

Arthur Steven Asset Management (ASAM) Limited, a leading investment banking group, in its economic and financial market review and outlook, said equities remained the favoured portfolio in terms of returns given the prevailing global and national macroeconomic environments.

The report noted that the direction of macroeconomic variable will pay a crucial role in shaping the equities market and most of these tilted towards continuing positive run at the equities market.

Analysts at ASAM stated that they expected inflation to be on the uptick into the first quarter of 2023, with the Central Bank of Nigeria on the offensive against inflation.

They added that the unprecedent positive close by equities in 2022, which defied its historic pre-election cycle performance, would attract foreign portfolio investment.

The report projected that Nigeria's GDP growth rate will slow down but remain positive.

'Considering our expectations about the economy, the equities market is expected to maintain positive outlook in 2023. Alhough the CBN is poised to maintain its aggressive policies against inflation, lessons learnt in 2022 show that investors are most likely to remain in the equities market given the yearnings for positive real returns which can only be delivered by the equities market, given the inflation rate at a staggering 17 year high of 21.47 per cent as at November 2022.

'On performance expectations, firms into services will perform better than those into manufacturing as they have been faced with cost problem fueled by rising input prices. In general, we expect firms in the...