L-R: Mr Ade Bajomo, Executive Director, Market Operations & Technology of the NSE,Mr Bismarck Rewane, Managing Director, Financial Derivatives Company Limited and Mr Nicholas Nyamali, Managing Director, Investment One Financial Services Limited at the 3rd edition of Investment One “Investors’ Forum” held recently in Lagos Nigeria.
By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE) –Bismarck Rewane, Managing Director and Chief Executive Officer (MD/CEO) of Financial Derivatives Company Limited (FDC) has tipped the insurance stock as the best buy for investors in the Nigerian Capital Market (NCM) in 2014.
Rewane at a question and answer session after his presentation ‘’2014 Outlook-The Fiscal, Monetary and Political View (Local and International)’’ at the Investment One Financial Services Limited third technical session for institutional investors said the insurance subsector would be the best buy for investors in the Nigerian Capital Market.
According to him, the subsectors that may be least vulnerable and have more value than others are insurance, building materials (cement) and banking.
Rewane said another reason for tipping the insurance stock as one of the best buy for investors in the Nigerian capital market in 2014 is that
companies operating in the industry are now well organised, better coordinated and highly capitalised.
‘’As people acquire assets, and the value of our currency and the assets depreciates, there is nothing more; but to do proper insurance’’ he said.
Rewane said the second best stock investors should consider is the building material stocks; especially cement manufacturing companies. ‘’On the part of the building material, especially cement, the raw materials are readily available, limestone, gypsum and others, this can move the market and investors in these companies will benefit thereafter,’’ Rewane said.
He affirmed that the third best stock investors should consider in 2014 is banking. According to him, despite the monetary tightening policy and the increase of the Cash Reserve Requirement (CRR) for banks to 75 percent (75%) by the Central Bank of Nigeria (CBN), that would also affect returns in the capital market, results of the banking stocks will be good in 2014.
‘’Banking stocks have done very well over the years, CRR or not, the results that will be out in 2014 will be good.
The CEO of FDC said there is a positive outlook on the Nigerian equities market and growth is expected to be modest in 2014 as investors may exercise more caution.
Rewane affirmed that there will be increased interest in fixed income instruments and possible capital outflow from Nigerian equities on the tapering by the United States (US) Federal Reserve.
Other positive outlook for the equities market in Nigeria in 2014 is the continuous tightening of liquidity by Nigeria’s Central Bank and commodities offering a hedge to equities; ‘’low bond yields offer fairly poor hedge and interest in real estate investments as a hedge against inflation,’’ he affirmed.
The factors that would drive performance in the capital market, Rewane said are monetary and fiscal policy; CBN tightening stance, increased government spending as 2015 elections approach and stronger investor risk appetite.
The other factors are volatility of the Naira, continued depletion of foreign reserves, possibility of further tapering of U.S. Fed stimulus.
On his part, Ade Bajomo, Executive Director (ED), Market Operation and Technology, Nigerian Stock Exchange (NSE) in his presentation ‘’The Nigerian Capital Market-Outlook for 2014’’ said Nigeria’s Exchange is seeking to attain the status of an emerging market and its fully committed to achieving that. ‘’The NSE has met seven (7) of the nine (9) criteria for an emerging market,’’ he said.
Bajomo while reacting to a question on Small and Medium Scale companies (SMEs) getting listed on the Alternative Securities Market (ASeM) disclosed that 16 companies have so far been listed in the ASeM platform.
‘’In listing the SMEs on the ASeM platform, people should realise that as much as we want to increase the number of listings, they need to meet certain minimum criteria to come to list in the market,’’ the NSE ED said.
He said the NSE owes the investing public the obligation to make sure that the quality of companies seeking to list are high, ‘’some of the SMEs are family owned and we have to be careful and prepare them for listing’’ Bajomo said.
Bajomo also said the NSE’s 2014 key initiatives are to increase new listings, operate a fair and orderly market, champion the development of enabling laws and policies, diversify its income streams and increase order flow.
Investment Ones third technical session sought to secure continued understanding and enlightenment amongst stakeholders with a view of ensuring continuous growth in the Nigerian capital market and improved investment processes.
