A capital market operator in the Nigerian Exchange Limited has expressed displeasure over what could be the effect of the Omicron new variants in the Nigerian economic landscape.
Managing Director, APT Securities and Funds Limited, Mallam Garba Kurfi, said that the low performance of banking stocks at the stock market is worrisome.
Mallam Kurfi, told our correspondent in a phone interview on Sunday that the economy was just recovering from the Covid-19 pandemic when this new variant surfaced.
According to him, banking stocks might not be able to surpass their previous performance in the fourth quarter due to fees and crash of interest rate.
He disclosed that investors in the Nigerian equities market lost about N1.71 trillion in 2020 as a combination of political risk, weak macroeconomic performance and tense global outlook drove the stock market to a second consecutive negative performance.
Kurfi, however, advised that investors should watch out for stocks that would benefit from the implementation of the new Finance Act, such as companies that will enjoy Value Added Tax exemption, like Nestle Nigeria Plc.
He said that building material companies, such as cement manufacturing companies, were likely to double their turnover due to an early implementation of the budget, adding that the insurance companies were likely to do better because of the recapitalisation with some mergers and acquisitions or takeover.
Looking back to 2019, the leading capital market analyst said Nigerian equities could repeat their 2019 feat in 2021 with a double-digit return that could compensate for the losses suffered in recent years, adding that after a three-year consecutive losing streak, Nigerian equities in 2019 posted average positive return of 42.3 per cent, which was regarded as one of the highest returns in the global stock market.
Kurfi stated that the Nigerian stock market was poised for a repeat of the 2019 performance this year, citing similarity of scenarios, macroeconomic environment and inherent attractions of Nigerian equities.
According to him, the benchmark index for the Nigerian equities’ market, the All Share Index, is expected to close in double digit by the end of 2020, a repeat of the 2019 performance.
He recalled that the stock market closed 2019 with a negative average full-year return of -14.60 per cent for the 2019 trading year, equivalent to net capital depreciation of N1.71 trillion for the year. It had recorded negative average full-year return of -17.81 per cent in 2018.
He said, the 2019 pricing performance marks the fifth negative closing in six consecutive years. After a world-leading positive return of 42.3 per cent in 2017, the market had reversed to negative in 2018 with average full-year return of -17.81 per cent.
Aggregate market value of all quoted equities at the Nigerian Stock Exchange had declined by N1.889 trillion in 2018. The stock market had been on a losing streak since 2016.
Kurfi said investors should have long-term horizon in order to maximize their returns, citing the historical performance of companies like Nestle Nigeria, which had turned into generational wealth for many families of investors.
Meanwhile, Kurfi has commended the conclusion of demutualisation of the Nigerian Exchange Limited, describing it as a process that would bring many benefits to operators, capital market and Nigeria.
He said demutualisation would boost economic activities and activate idle capital in the market, thereby boosting economic activities, adding that it would change the perspective and drive more growth for the nation’s economy.
“It is a good thing that all of us are going to be happy at the end of the day because it is going to unlock more capital for the market. For instance if I place shares as collateral, I can trade and make money, we are pleased that this is coming after so much delay, this will change the economy’s perspective as well. My only worry is that we are slow starter, and we need our regulators to wake up to their responsibilities,” he