United Capital Plc has released the 2020 Nigeria Economic Outlook Report and projects that equities market would likely return at +5.3 per cent, driven by local demand for high-quality dividend-paying stocks and increased system liquidity.
The report, tagged “A Different Playing Field’’ carefully considers events in the international economic environment. This includes the effects of the US-China trade wars on the global economy, as well as piecing together the stance of the world’s biggest central banks from their decisions over the course of 2019.
It takes these parameters into consideration, (combined with local happenings on the political and economic policy scene) to project the nature and movement of the economy in 2020. For the country, the report noted that the continued auction of high yield Open Market Operation (OMO) bills to Foreign Portfolio Investors (FPIs) may keep foreign interest in local equity market tepid. This is amid fears of a Naira devaluation and confidence deficit in the economy.
“FPIs are likely to continue their flight to safety by swapping/selling equities for low-risk OMO bills. “Our outlook for stocks in 2020 is anchored on developments in the domestic and global economy with monetary policy as the biggest factor to watch.
“From all indications, the only justification for an uptick in the equities market is the lower yield environment, supported by increased local currency liquidity. “However, this will not be enough to trigger a major rally in the absence of the demand from FPIs,” it said.
The report also contains projections for the Nigerian economy in the light of global, regional and local events in addition to projected growth levels of the country’s economy at intervals throughout the year based on extensive research.
The publication is aimed at seasoned investors and Nigerians looking for a guide as to what to expect in the year. Speaking on the report, Mr Peter Ashade, United Capital Group Chief Executive Officer, said that the underlying theme of the outlook report for this year was change.
Ashade stated that changes in key indicators such as oil prices, the status of the US-China trade war, domestic fiscal and monetary policy environment would vary the investment landscape in Nigeria 2020. He noted that unconventional policy measures by the apex bank, as well as a review of fiscal policy framework in Nigeria, also informed the theme of outlook report this year: “A Different Playing Field’’.
United Capital Plc is an investment banking group at the nexus of technology, professional financial services and financial inclusion in Africa. For over 50 years, it has blazed the trail in leadership, innovation and service delivery in the finance industry, serving governments and top corporates as well as SMEs and individuals.