Equity Investment: Positioning for H1 2017

July 25, 2015/InvestmentOne Stockbrokers

As the half year result for quoted companies continues to roll in and corporate actions are declared, see below our top picks and our economic reasoning which resulted in us taking this position.

  • Going into the second half of the year, we envisage a pick-up in global economic output with support from growth momentum in emerging economies as well as in commodity exporters. 
  • In Nigeria, we expect the ongoing economic recovery to continue on a positive trajectory given relative peace in the Niger Delta, supported by offshore borrowing (Eurobond and Multilateral institutions),  as well as recent reforms in the foreign exchange market through the creation of the I&E window for investors.
  • In our opinion, sustained Foreign exchange sales by the CBN and an improved liquidity injection through the implementation of the 2017 budget, will bode well for both the construction and manufacturing sectors.
  • Given this, we anticipate the stock market performance to see support from the impact of improving macro-economic environment on the earnings scorecards; recent reforms in the FX market; and the revised PFA investment guideline which mandates an increased allocation to equities from Pension Fund Administrators.
  • Going forward, we expect the positive trend in the NSE-ASI to continue in anticipation of positive H1 2017 earnings
  • Downside risk to our outlook on equities however remains from volatility in Brent oil price given its impact on reserve accretion, exchange rate stability as well as offshore investors’ confidence.
  • Our TOP PICKS are: Access, Dangote Cement, GTB, NB, Nestle, UBA and Zenith Bank.

We will be happy to take your mandates as you position for H1.

opan



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