2018: Vetiva Bullish on Equities Market, Projects 15% Growth

MARKET NEWS

As the nation’s market moves to close 2017 with its first positive performance after three years of decline, Vetiva Research has projected continuous growth in the equities market in 2018.  After declining in 2014, 2015 and 2016, the equities market is expected to close 2017 with a growth above 40 per cent.

In its Full Year 2018 Outlook report on the Nigerian economy, key sectors and capital markets, Vetiva Research said equities will have the upper hand in comparison to the fixed income space.

 According to the research analysts from the investment banking firm,  “Despite the 2017 equity market rally driven by a partial liberalisation of the country’s exchange rate regime, the Nigerian Stock Exchange remains relatively undervalued.”

They have therefore  projected  further gains for the equities market in 2018, with an estimated full year return of  between 15 per cent and 20 per cent.

 Vetiva also presented its “10 High Conviction Stocks” for 2018, representing key counters on the NSE that present strong fundamentals and are expected to outperform the market in the year.

With their “10 High Conviction Stocks” outperforming the board market return by 15 per cent and 16 per cent in 2016 and 2017 respectively, Vetiva highlighted Tier II banking stocks amongst others as key recommendations for 2018.

On the broader economy,

 Head of Vetiva Research, Olalekan Olabode, said: “As the Nigerian economy continues its recovery, possible political tension ahead of 2019 elections could cap gains from the wider economy. The second half of 2018 is likely to be blurred by possible political and social volatilities, whilst electioneering could potentially distract policy-makers and delay investment. The silver lining can be found in Nigeria’s more mature democracy in terms of credibility and transition, ensuring that the economy progresses relatively unencumbered.”

Also speaking, Chief Economist of Vetiva Capital, Michael Famoroti stressed  for brave policy action to shift growth beyond first gear.

According to  Famoroti,  amid a more accommodative global environment, Nigeria should have confidence in boldly pursuing its internal growth agenda.

  “Internally, the most notable improvement would be the full recovery of oil production currently around 2.0 mb/d – to a level close to, but still short of the 2018 Budget benchmark of 2.3 mb/d (forecast: 2.1 mb/d). From this, we can expect to see further consolidation in federal government  revenues and the foreign exchange (FX) market.”