An investment analyst, Oluwaseun Dosunmu, has predicted that the stock market will remain resilient this year, despite the trend of market dip which usually occurs in election years.
Dosunmu, who is the Head of Investment Research, Parthian Securities, made the prediction at the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) on Wednesday in Lagos.
According to him, the stock market is primarily dominated by domestic investors, and the equity space is not prone to capital flight.
He spoke on the theme: “Assessing Nigeria’s Financial Sector and Outlook for the Economy in 2023.”
“In 2019 our market was largely driven by domestic players because the foreign investors decided to leave, which means that domestic institutional players like the Pension Fund Administrators (PFAs) and the likes.
“The interesting thing is that if the domestic players are moving the market, that means the market will not be subject to foreign shocks.
“It is a good thing and it also has its negative side, but one benefit is that whenever anything happens in the global economy the impact on our market is always minimal,” said Dosunmu.
According to him, historically, the stock market is negative every election year.
“From the start of 2019, we had only three months in the whole year that closed positive. But that is not the case in this election year,” he said.
He emphasised that the narrative had changed, and the focus for investors in 2023 would be to focus on specific sectors, and focus on specific stocks, that would give them the kind of return that they wanted.
On her part, Head, Global Markets at Parthian partners, Ronke Akinyemi noted that while the removal of subsidy would be a positive for the government, the process should be gradual.
She, however, noted that while the removal of fuel subsidy would lead to an improvement in Nigeria’s foreign reserves and reduce the burden on the fiscal side, it would also lead to increased cost of living.
“If subsidy is removed, there is likely going to be increased social unrest.
“We haven’t even seen anything and we have already seen unrest in little bits and pieces. But on the flip side, if subsidy is removed, we expect our reserves will improve,” she said.
She also said even if the subsidy would be removed, it should be staggered as opposed to removing it 100 per cent.
She said, “So, let’s say 25 per cent, wait a few months see how that pans out, take out more so that the effect is not fully felt by the most vulnerable even though it will be fully felt because it is staggered.
“Doing so will sort of prepare them for what is ahead.”
