Capital Bancorp Plc has projected that with the sustained improvement in economy, Nigeria’ external reserves will cross $48.50 billion by the end of December 2018.
This is just as the company identified critical factors that will boost performance of the Nigerian Stock Exchange (NSE) this year for enhanced competitiveness.
Addressing the financial press in Lagos yesterday, the company’s Managing Director, Mr Higo Aigboje, said the growth in external reserve will be achievable as long as the government does not irrationally increase her spending during the year especially in the second half of the year as the country begin to close in on the election period and the price of oil continues to firm up or remains stable at current level.
External reserves stood at $38.76 billion as at December 29, 2017 in contrast to $25.84 billion as at December 30, 2016, up by 50 per cent ($12.92 billion) year on year.
Aigboje noted that the significant rise in the country’s reserve was attributed to the substantial recovery in crude oil prices, increase in the country’s oil production and increased FX inflow from the Investors’ and Exporters’ Window (NAFEX).
The company in special 70-Page Report tagged ‘Economic Review and Outlook For 2018’, noted some headwinds that could moderate the market performance in the year unless they are managed.
Aigboje explained that the performance boosters of the Exchange for the year were; Stability of oil prices, effective management and improved liquidity of the foreign exchange market, improvement on the corporate earnings, significant focus on the non-oil sector to increase output and lower interest rate regime.
“Effective synergy in the use of fiscal and monetary policies, government’s focus on the real sector of the economy, improved market participation by local investors and Domestic Institutional Investors, efficient regulation of the market by the Securities and Exchange Commission (SEC and the Nigerian Stock Exchange).
“Others are passage of Petroleum Industry Bill, unbundling of Nigerian National Petroleum Corporation and listing of resultant companies and deliberate efforts aimed at encouraging more listing on The Exchange company such as Telecom, Gencos among others“, Aigboje said
He however, explained that issues such as sudden rise in insecurity can trigger exit of the Foreign Portfolio Investors (FPI), political instability owing to forthcoming general elections, sudden reversal in oil prices, an upturn in the yields of fixed income securities and failure in the banking sector, which may trigger a sell-off and cause further damage to the entire stock market.
According to him, the Company’s review of the global and Nigeria’s financial markets was designed to serve as a compass for both indigenous and foreign investors as well as potential investors.
The Chief Analyst, Mr Victor Chiazor, Capital Bancorp in his presentation forecast that the global economic growth would hit 3.5 per cent this year as against 3.1 per cent last year.
“With ample opportunities in some stocks in the Banking Sector and Consumer Goods Sector of the equities market, we have projected a 25 percent return for the Nigerian Stock Market in 2018, though downward risks to achieving this target remain visible”, Chiazor said.