By Munachi Chiwendu
Capital market experts have said that Nigeria’s recovery in 2021 is hinged on stable oil prices, fiscal and monetary policies and investors’ sentiment in equities.
According to the experts, Nigeria needs to make much more significant structural progress in reducing its vulnerabilities to oil cycles, future declines in the oil price and place its focus on Nigeria’s capital market as it will play a key role in the much talked about recovery.
Delivering a presentation titled; Emerging Market- Outlook and opportunities in the Nigerian capital markets during the annual Nigerian Stock Exchange (NSE)’s 2020 Market Recap/2021 Outlook today, Chief Economist, Africa and the Middle East, Standard Chartered Global Research, Razia Khan, said that there is an expectation that 2021 will bring at least technical recovery in growth which won’t be enough for the Nigerian economy.
Chief Economist, Africa and the Middle East, Standard Chartered Global Research, Razia Khan
Khan noted that the nation’s capital market will play a huge role in its economic recovery due to the fact that portfolio investors seeking higher yields will still be looking to African especially Nigerian markets to drive the desired investment returns while adding that there is need for the Federal government to contain its debt service bill.
According to her, the Nigerian equity market is less FX sensitive as in asset class than bonds and equities will protect investors’ returns in case there is higher inflation.
“Having seen this unprecedented amount of global stimulus and liquidity creation, how much is going to be attracted back to economies like Nigeria? Will it be possible to create the conditions that create confidence that Nigeria is at the very cusp of a longer term structural diversification drive that will move things differently in the future?
We have already seen it in recent months in terms of the performance of the NSE that the building blocks of recovery from the capital market is very much in place for a more sustained rally and it seem like a very good note to state that it is about whether we can see long term lasting structural change which will be the best way of underscoring recent performance of the NSE.
We are encouraged by the forecast of oil prices that $51 per barrel in 2021 is sure to support the technical recovery of the Nigerian economy and we are encouraged that portfolio investors seeking higher yields will still be looking to African markets to drive the desired investment returns”, She said.
For his part, Chief Executive Officer, NSE, Oscar Onyema, said, the exchange expects the marginal reopening of businesses, normalization of the economy and revenue diversification drive of the Nigerian economy to elicit positive sentiments throughout the year.
“Our growth expectation should be noted with caution as the second wave of COVID-19 in Nigeria and indeed globally, may slow down renewed social and economic activities”, he said
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