Following the stellar performance recorded in the equities market this year, analysts at FBN Capital Limited have forecast a growth in equities on the Nigerian Stock Exchange (NSE) in 2014.
The experts made this known while presenting their 2014 economic forecasts at the annual investor conference in Lagos themed: “Tomorrow’s Nigeria through Economic Empowerment,” organised by FBN Capital Limited.
While giving the firm’s 2014 outlook on equity/fixed income views, the Head, Equity Research, FBN Capital, Olubunmi Asaolu, said: “A modest multiple expansion is expected on equities in 2014.”
He added that at the current level, risk-reward appeared slightly more favourable in fixed income instruments than equities.
According to him, within equities, banks and the cement industries are slightly favoured over consumer goods by FBN Capital. As for consumer goods, he indicated that FBN Capital believed the market had expended the goodwill given the significant gains in recorded in several blue chip names in this space.
On the macroeconomic front, Head, Macroeconomic and Fixed income Research, FBN Capital, Mr. Gregory Kronsten, noted the Central Bank of Nigeria’s rationale for caution and its tight monetary stance since the third quarter of 2010 would likely run through 2014.
According to him, the outlook on real growth of the nation’s economy is expected to rise to 6.8 per cent from an expected 6.7 per cent at 2013 year end, compared with 6.6 per cent at year end 2012.
Inflation is also predicted to rise to 8.0 per cent year end 2014, from an estimated 7.7 year end 2013, compared with 12.0 per cent year end 2012.
He explained that the Monetary Policy Committee has maintained a tight monetary stance through its policy rate and tools such as the cash reserve ratio (CRR) for banks.
According to him, the tight monetary stance had helped to deliver striking achievement on inflation, with the nation recording single-digit inflation for nine consecutive months adding that the central bank is expected to narrow its objective from digit to range of six per cent and nine per cent.
