Unlike the previous year, 2017 has been a stellar year for global equity markets as major equity benchmarks across the world are set to close the year in the green. In Nigeria, it has been a story of recovery in the broader economy and the domestic equities market is no exception with the benchmark index (NSEASI) set to outperform peers in the global and emerging market region as YTD return is currently above 40%.
Over 2017, three major factors spurred positive sentiments on the local bourse:
- The introduction of the Importers & Exporters’ Window in mid-April which helped stabilize volatility and liquidity in the FX market, pulling-back foreign investors who have been waiting for on the sideline
- Improved macro fundamentals as Nigeria exit recession, boost to external reserves, brokered peace with militants amid oil price rally and improvement in ease of doing business
- Strong corporate earnings results.
Going into 2018, we see scope for further uptrend as a stable outlook in the oil market, expansion in the local economy, enhanced corporate earnings and less aggressive monetary policy vis-a-vis lower yield environment, drive demand for equities higher. However, uncertainties associated with a pre-election year may constrain market momentum.
United Capital Research