Leader in global fixed-income, equities market and structured finance, the Parthian Group has offered the willing and discerning minds of where they should be investing in 2023.
Speaking at the February 2023 forum of the Finance Correspondents Association of Nigeria ( FICAN), the duo of Oluwaseun Dosunmu, Head of Investment Research, Parthian Securities and Ronke Akinyemi Head, Global Markets at Parthian Partners advised investors to stay short and liquid, take advantage of higher yields and invest in dollar assets – Eurobonds as well as dollar placements bearing in mind that
the rules about diversification still stand.
The theme of the forum was “Assessing Nigeria’s Financial Sector and Outlook for the Economy in 2023”.
In his presentation, Mr Dosunmu said those with an interest in the equities market should focus on: the top 20 fundamentally strong stocks in terms of market capitalization in the Nigerian Exchange; liquid stocks and those that pay good dividends.
He said the dominance of domestic investors in the Nigerian equities market is a good development because it shields the market from the impacts of funds outflow from emerging markets and global headwinds.
On what to expect from the market that will guide investment decisions, Mrs Akinyemi said there will be Public-private partnerships to reduce pressure on the budget funding, just as there will be debt issuances on the back of these partnerships and opportunities to invest in these issues.
“The uptick in interest rates is, however, anticipated in the second quarter, resulting from a reduced level of liquidity and a huge budget deficit.
“We expect the market to commence this year with some depression in yield, owing to expected liquidity elevation in the first quarter,” she stated.
Generally, the investment expert noted that the market is expected to be choppy and largely driven by political transitioning, oil price fluctuations, trade wars, the possibility of interest rate hikes by other economies and risk-off/on sentiments.
According to her, the Monetary Policy Rate (MPR) is likely to increase, and credit conditions may remain tight in Q1-23.
Further, the experts agreed that there will be increased financial speculation and
weakened investors’ confidence.
Earlier, Akinyemi had recalled that after the Q2-2022 selloffs triggered by the higher interest rates in the fixed-income market, the Nigerian stock market was volatile with many stocks trading at substantial discounts and delivering greater dividend yields than fixed-income space.
As such, the stock market created a massive opportunity for bargain hunting from mid-Q2 to Q4 2022, pushing the 2022 year-to- (YTD) return to 19.98 per cent.
On a positive note, she said there was an improved growth level as the economy
began to recover from the impact of the
pandemic.
Nigeria became one of the first sovereigns to access funds from the International Capital Market since the start of the Russian-Ukraine war when it raised about $ 1.25 billion on a 7-year paper at a yield 8.375 percent.
Since issuance in March 2022, the yields on the Nigeria 7-year Eurobond
issue has increased by 2.5 percent of points to 10.9 percent as of 30th June 2022, from
the 8.4 percent recorded on 18th March 2022.
She said Non-performing loans are likely to increase among lenders as high borrowing costs might raise default risks. PSB license might erode banks’ Non-Interest Revenue.
” Regulatory blocks remain a risk for the industry, even as the sector will benefit from improved economic activities.
“High borrowing cost to weigh on business profits,” she explained.
Parthian Group leverages technology to provide a bouquet of diverse financial services to individuals and institutions, enabling growth at all levels.
The FICAN bimonthly forum is a platform where finance journalists engage subject matter experts to discuss topical issues, investment, policy implications, and the Nigerian economy in general.