The Managing Director of Cowry Asset Management Limited, Mr. Johnson Chukwu, has projected a potential downward adjustment in the Nigerian equities market in 2024.
Chukwu, conveying his observations in a report ‘2023 Nigerian Economic & Financial Market Review and Outlook for 2024’ posits that certain stocks may have experienced an unjustified increase in value amidst the ongoing market rally.
Factors attributed to price adjustment:
He noted that the anticipated southwards price adjustment in the Nigeria equities market during 2024 can be attributed to various factors.
- “Firstly, there is a prevalent overvaluation of numerous stocks, surpassing their intrinsic value. Additionally, an anticipated rise in fixed-income yields is expected, prompting portfolio rebalancing by fund managers.
- Furthermore, the country’s challenging economic environment may contribute to the suboptimal performance of many quoted companies.
- High-net-worth individuals (HNIs) and certain institutional investors are actively pursuing dollar assets as a strategy to safeguard their wealth, potentially influencing market dynamics,” he said.
In light of these considerations, Mr. Chukwu recommends that investors adopt a strategy focused on value stocks and avoid succumbing to herd mentality. He emphasizes the importance of discernment in navigating the market dynamics.
According to Chukwu, sectors displaying relatively robust prospects include banking, industrial goods, the construction industry, and the oil and gas sector. This insight is provided as guidance for investors seeking to make informed decisions in the evolving market conditions.
What you should know
The Nigerian Exchange Limited (NGX) maintained the bull run on the 23rd of January as the benchmark index closed 2.97% stronger to settle at 98,616.97 points.
Sustained by interests in industrial heavyweights namely, DANGCEM (+9.99%), BUACEMENT (+10.00%) alongside SEPLAT (+10.00%) drove the market strong performance, offsetting selloffs in ZENITHBANK (-4.43%), GTCO (-3.51%) and UBA (-3.07%).
As a result, the year-to-date (YTD) return rose to 31.89%, while market capitalization gained N1.56 trillion to close at N53.97 trillion.
Analysis of today’s market activities showed trade turnover settled higher relative to the previous session, with the value of transactions up by 12.97%.
747.51m shares valued at N16.28 billion were exchanged in 16,589 deals. TRANSCORP (-9.99%) led the volume chart with 77.71 million units traded while DANGCEM (+9.99%) led the value chart with deals worth N3.11 billion.
