An investment banking firm, Comercio Partners, has urged investors to adopt a cautious approach and focus on sectors that drive the economy in the second half of the year.
This was revealed in the firm’s review of the economy for the first half of the year and the outlook for the second half.
Reviewing the first half of the year, the co-managing partner, Comercio Partners, Steve Osho, said, “The first half of this year has been an exhilarating ride, featuring a blend of bullish and bearish sentiments in the fixed income markets.
“The Nigerian stock market, displaying its resilience, weathered macroeconomic challenges and election anxieties, soaring to its highest index point in 16 years at 66,381.20, making the NGX the best performing in Sub-Saharan Africa
“In the same vein, the beginning of the exchange rate reform which saw the acting CBN governor announcing the commencement of a much more flexible exchange rate policy and unification of the currency has seen better harmonisation between the I&E official window and the parallel market trading within a very close gap of circa $/760-770.”
Projecting on the direction of the economy in the second half, Osho stressed that the economic trajectory will be hinged on the ministerial appointments by President Bola Tinubu, as well as forthcoming monetary and fiscal policies.
“The sustainability of the fuel subsidy removal and the liberalisation of the foreign exchange market will play pivotal roles in the second half of the year. Alongside this, the revision of the minimum wage from N30,000 to N200,000 to enable Nigerians to bear the brunt of the economic reforms emerges as a topic of interest,” he said.
For the financial markets, Osho opined that the positive performance would continue with increased participation from foreign portfolio investors.
He said: “For the fixed-income markets, we expect bullish sentiments in the near term, due to the buoyant system liquidity. However, as the year progresses, cautionary sentiments may arise, as investors keenly observe foreign portfolio investors’ participation, with yields expected to trend upwards to attract Foreign Portfolio Investments.
“For the local stock market, we envision a continued upward trajectory in the benchmark All-Share Index, driven by investor anticipation of impressive financial performance from banks following the unification of foreign exchange rates.”