Some capital market operators have said that the heavy reliance on the private sector for developmental projects in the 2024 Appropriation Bill will boost a bullish run in the stock market.
This was stated in exclusive chats with The PUNCH as stakeholders make projections about the new year.
Data and research company, Analysts’ Data Services and Resources, in its Budgeting For The Citizens report published in December, pointed out that as the nation looks at bringing out efficiency in its public spending, there was a need to attract more private capital.
“As Nigeria works towards improving its public spending efficiency, it also needs to attract and sustain private capital, domestic and foreign, particularly into sectors with high impacts on its citizens’ welfare,” part of the report said.
In his comments, the Chief Executive Officer of Wyoming Capital and Partners, Tajudeen Olayinka, said that the bullish run of the market in 2023 started in 2022 and looks likely to be sustained in the new year.
Looking back, Olayinka said, “The Market in 2023 has been quite eventful and bullish. We saw a market that picked its 2023 position way back in November 2022, when it was obvious that the three leading presidential candidates, namely: Asiwaju Bola Ahmed Tinubu, Peter Obi and Alhaji Atiku Abubakar, that could succeed former President Muhammadu Buhari, were pro-market. And so, the build-up to the bullish run in 2023 that started in November 2022 was a demonstration of market confidence in a private sector-centric president.
“The inaugural speech of President Bola Ahmed Tinubu, concerning fuel subsidy removal and exchange rate unification, eventually activated the market-wide pent-up confidence that had always been there but eluded the market ever since. This market-wide confidence remained throughout the year. Investors who built their portfolios around the consumer goods sector, Banking Sector and oil and gas sector had bountiful harvests, as these sectors outperformed the All-Share Index in 2023, while the Industrial Goods Sector underperformed the market.”
On projections for the year, the stockbroker of many years standing said that the new year will be a positive one for the Nigerian stock market.
“We can draw that from the 2024 budget proposal of President Bola Ahmed Tinubu, where total reliance has been placed on the use of private capital in funding some important developmental projects across the country. In a way, we are going to see more public companies get listed on the stock exchange to raise new capital, while the existing listed companies will not be left behind in this development. So, I see a very bullish and active primary market in 2024, even though, there could be occasional moderation in price movement across the board, as investors take profit and engage in portfolio rebalancing.”
He added that the fact that “Private sector will take the lead in navigating the economy out of its prolonged state of disequilibrium, we will see a better capital market in 2024.”
Ahead of the first trading week in the new year, researchers at Cowry Asset Management projected that investors will be anticipating positive policy reforms from economic drivers.
“Cowry Research anticipates a pervasive bullish sentiment as investors position themselves for the new year through sectoral portfolio rebalancing. With the January effect in play, investors are expected to engage in profit-taking and bargain-hunting for dividend-paying stocks as the reporting and earnings season approaches. The strategic reallocation of funds among sectors and adjustments in portfolios to align with changing market conditions are likely to shape trading activities, reflecting investors’ pursuit of optimal risk-return profiles and capitalizing on emerging opportunities,” part of their weekly report said.
At a one-day retreat organised by the Senate Committee on Appropriation, the Minister of Finance and the Coordinating Minister of the Economy, Mr Wale Edun, said the country is targeting multi-trillion-dollar climate change financing to fund the 2024 budget.
He said, “Nigeria’s fiscal space is exhausted, and the solution is that we have to focus on concessioning funding and climate financing.
“There is an estimated $1tn per annum to be spent for climate change. The UAE announced $30bn for climate action. Another $1.5bn was announced by a global group. What that means is that as we move to fund the N27.5 trillion budget next year, our first port of call must be to target the cheapest concessionary financing, including climate change financing. The federal government, three days ago, signed a €100m equity foreign direct investment for re-afforestation in the Mangrove Forest in Cross River State. We will go and search for similar types of transactions as much as possible.
He added, “Our 2024 proposed budget states clearly that there is room for privatisation, maximising our assets without borrowing. We have to be brave, courageous and innovative to make sure that we use the financial market to take our fiscal stress down to reduce our debt servicing and reduce our emphasis on borrowing.”
