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Capital market will be bullish in 2008, forecasts Sterling Capital
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Ndi Okereke-Onyiuke, DG, Nigerian Stock Exchange
Building on the performance in 2007, the capital market is expected to witness another impressive performance this year, Sterling Capital, an arm of Sterling Bank, has forecasted in its Economic Review and Outlook for 2008
However, the report noted that unlike last year when stock prices were believed to be fueled by excess liquidity, performance, this year will be based more on strong fundamentals and good corporate performance.
The Nigerian Stock Market recorded impressive performance in 2007 in spite of the downturn that saluted the global stock market. The NSE All-Share index soared higher by 74.73 percent from 33,189.30 points recorded at the beginning of the year to close at 57,990.22 points on December 31, 2007.
The stock market also performed better than the money market, which returned about 13 percent during the year.
The aggregate market capitalisation of all the 310 listed securities increased by 159.6percent from N5.12 trillion to close at N13.29 trillion. The market capitalisation was buoyed by the listing of the equities of about 12 new companies in 2007, coupled with the additional shares issued by existing quoted companies
According to the report made available to Business Day, the spate of public offers and new listings towards the end of 2007 suggest that the excess demand in the stock market may be drying up.
“Like in 2007, the banking and insurance sectors would remain the toast of investors in view of expected strong performance. Nigerian banks in particular are expanding rapidly in West Africa as well as Europe and America, while many are being listed on foreign stock exchanges,” the Sterling Capital outlook said.
Hence in addition to the growing opportunities in the domestic market, performance will be boosted by foreign subsidiaries, coupled with the associated linkage and scale benefits.
The insurance sector is now set for further capitalisation to strengthen its underwriting capacity and position it to play in the very lucrative energy and maritime sectors, which have hitherto been the exclusive preserve of foreign firms,” said the report.
Recognising the importance of infrastructure in economic development, the report noted that the sector presents the greatest prospects for growth, particularly with the continued privatisation and liberalisation of the telecommunications and power segments, stressing that significant value will begin to be unleashed as companies in these sectors begin to go public and their shares listed.
“The construction sector will benefit immensely from the proposed huge spending on roads/ bridges and expected housing developments.
“The bond market will be reactivated given the Federal Government’s pronouncement to finance infrastructural development through the market. This will also encourage more state governments to raise money through bonds.
“The public sector appears to be coming to terms with the fact that developmental projects have inter-temporal benefits. Hence besides fast-tracking the pace of development, it makes sense to borrow long, conclude the project now and allow future generations to bear part of the cost.”
The review, however, expect more activity in the corporate bond segment, giving the benefit of protecting the interest of existing shareholders and the growing appetite of investors for fixed income instruments.
The Nigerian Stock Market recorded impressive performance in 2007 in spite of the downturn that saluted the global stock market. The NSE All-Share index soared higher by 74.73 percent from 33,189.30 points recorded at the beginning of the year to close at 57,990.22 points on December 31, 2007.
The stock market also performed better than the money market, which returned about 13 percent during the year.
The aggregate market capitalisation of all the 310 listed securities increased by 159.6percent from N5.12 trillion to close at N13.29 trillion. The market capitalisation was buoyed by the listing of the equities of about 12 new companies in 2007, coupled with the additional shares issued by existing quoted companies
According to the report made available to Business Day, the spate of public offers and new listings towards the end of 2007 suggest that the excess demand in the stock market may be drying up.
“Like in 2007, the banking and insurance sectors would remain the toast of investors in view of expected strong performance. Nigerian banks in particular are expanding rapidly in West Africa as well as Europe and America, while many are being listed on foreign stock exchanges,” the Sterling Capital outlook said.
Hence in addition to the growing opportunities in the domestic market, performance will be boosted by foreign subsidiaries, coupled with the associated linkage and scale benefits.
The insurance sector is now set for further capitalisation to strengthen its underwriting capacity and position it to play in the very lucrative energy and maritime sectors, which have hitherto been the exclusive preserve of foreign firms,” said the report.
Recognising the importance of infrastructure in economic development, the report noted that the sector presents the greatest prospects for growth, particularly with the continued privatisation and liberalisation of the telecommunications and power segments, stressing that significant value will begin to be unleashed as companies in these sectors begin to go public and their shares listed.
“The construction sector will benefit immensely from the proposed huge spending on roads/ bridges and expected housing developments.
“The bond market will be reactivated given the Federal Government’s pronouncement to finance infrastructural development through the market. This will also encourage more state governments to raise money through bonds.
“The public sector appears to be coming to terms with the fact that developmental projects have inter-temporal benefits. Hence besides fast-tracking the pace of development, it makes sense to borrow long, conclude the project now and allow future generations to bear part of the cost.”
The review, however, expect more activity in the corporate bond segment, giving the benefit of protecting the interest of existing shareholders and the growing appetite of investors for fixed income instruments.
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