The Parthian Group, renowned for its expertise in global fixed-income, equities market, and structured finance, has recently provided investment strategies for a profitable year in 2023.
During the Finance Correspondents Association of Nigeria (FICAN) forum held in February 2023, Oluwaseun Dosunmu, Head of Investment Research at Parthian Securities, and Ronke Akinyemi, Head of Global Markets at Parthian Partners, shared valuable advice for investors. They recommended staying short and liquid, capitalizing on higher yields, and investing in dollar assets such as Eurobonds and dollar placements. They also emphasized the importance of portfolio diversification as a key principle to consider while making investment decisions.
The theme of the forum was “Assessing Nigeria’s Financial Sector and Outlook for the Economy in 2023.”
In his presentation, Dosunmu said those with an interest in the equities market should focus on the top 20 fundamentally strong stocks in terms of market capitalization in the Nigerian Exchange; stocks that are liquid and those that pay good dividends.
He said the dominance of domestic investors in the Nigerian equities market is a good development because it shields the market from the impacts of funds outflow from emerging markets and global headwinds.
On what to expect from the market that will guide investment decisions Mrs. Akinyemi said there will be public-private partnerships to reduce pressure on budget funding, just as there will be debt issuances on the back of these partnerships and opportunities to invest in these issues.
“Uptick in interest rates is however anticipated in the second quarter, resulting from a reduced level of liquidity and huge budget deficit. We expect the market to commence this year with some depression in yield, owing to expected liquidity elevation in the first quarter,” she stated.
Generally, the investment expert noted that the market is expected to be choppy and largely driven by political transitioning, oil price fluctuations, trade wars, the possibility of interest rate hikes by other economies, and risk-off/on sentiments.
According to her, the Monetary Policy Rate (MPR) is likely to increase and credit conditions may remain tight in Q1-3. Further, the experts agreed that there will be increased financial speculation and weakened investors confidence.
Earlier, Akinyemi had recalled that after the Q2-2022 selloffs triggered by the higher interest rate in the fixed-income market, the Nigerian stock market was volatile with many stocks trading at substantial discounts and delivering greater dividend yields than fixed-income space. As such, the stock market created a massive opportunity for bargain hunting from mid-Q2 to Q4 2022, pushing the 2022 year-to- (YTD) return to 19.98 percent.
On a positive note, she said there was improved growth level as the economy began to recover from the impact of the pandemic. Nigeria became one of the first sovereigns to access funds from the International Capital Market since the start of the Russian-Ukraine war when it raised about $ 1.25 billion on a 7-year paper at a yield of 8.375 percent…
Since issuance in March 2022, the yields on the Nigeria 7-year Eurobond issue have increased by 2.5 percent points to 10.9 percent as of 30th June 2022, from the 8.4 percent recorded on 18th March 2022. She said Non-performing loans are likely to increase among lenders as high borrowing costs might raise default risks. PSB license might erode banks’ Non-Interest Revenue.
“Regulatory blocks remain a risk for the industry, even as the sector will benefit from improved economic activities “High borrowing cost to weigh on business profits,” she explained.
Parthian Group leverages technology to provide a bouquet of diverse financial services to individuals and institutions, enabling growth at all levels.
The FICAN bi-monthly forum is a platform where finance Journalists engage subject matter experts to discuss topical issues, investment, policy implications, and the Nigerian economy in general.