Parthian Group has advised investors to stay liquid, take advantage of specific equities, and invest in dollar‑denominated assets and placements. The recommendation came from the firm’s fixed‑income, equities, and structured finance teams during the February 2023 forum of the Finance Correspondents Association of Nigeria in Lagos.
The advice was presented by Oluwaseun Dosunmu, Head of Investment Research at Parthian Securities, and Ronke Akinyemi, Head of Global Markets at Parthian Partners. The event, themed “Assessing Nigeria’s financial sector and outlook for the economy in 2023,” featured Dosunmu’s suggestion that investors interested in equities focus on the top 20 fundamentally strong stocks by market capitalisation on the Nigerian Exchange—specifically those that are liquid and offer good dividends. He noted that the dominance of domestic investors in the Nigerian equities market is a positive development, as it shields the market from fund outflows in emerging markets and global headwinds.
Akinyemi discussed expectations for the market and highlighted the role of public‑private partnerships in easing pressure on budget funding. She indicated that these partnerships would likely lead to debt issuances, presenting new investment opportunities. However, she warned of an anticipated uptick in interest rates in the second quarter, driven by reduced liquidity and a large budget deficit. She expects the market to begin the year with some yield depression due to elevated liquidity in the first quarter.
Overall, Akinyemi noted that market dynamics would be shaped by political transitions, oil price fluctuations, trade wars, potential interest‑rate hikes abroad, and shifting risk‑on/off sentiments. She projected that the Monetary Policy Rate would rise and credit conditions might remain tight in Q1‑23, leading to increased financial speculation and weakened investor confidence. Reflecting on the Q2‑2022 sell‑off triggered by higher interest rates in the fixed‑income market, she observed that the Nigerian stock market became volatile, with many stocks trading at substantial discounts and offering higher dividend yields than fixed‑income instruments. This created a significant bargain‑hunting opportunity from mid‑Q2 to Q4 2022, contributing to a year‑to‑date return of 19.98 percent for 2022. On a positive note, she added that the economy’s growth level has improved as it recovers from the pandemic’s impact.
Comments are closed for this story.