“Earnings season ideally should be a catalyst to the market, not only in terms of price gains but also in terms of the activity level. In my own view I think the earnings season this year is going to have very little impact on the market,” Rasaq, the team lead researcher at UBA Capital, told CNBC Africa on Thursday.
“The fact that the foreign investors are still a little adverse to the market, I don’t expect them to come back to the market. Sometime in September when a good number of them would have a clear view, they will begin to take back positions in the emerging market, Nigeria inclusive.”
Despite the negative sentiment around the sector, the banking as well as consumer goods sectors lifted the market up in early trade on Thursday with gains in cement and breweries. Nigerian stocks climbed to their highest level in three weeks.
Rasaq is particularly confident about the top tier banking stocks for third quarter despite them having a slow first quarter.
“The top tier banks, the likes of First Bank, actually had a slow loan growth in Q1 for strategic reasons because they’ve got a couple of deals in the pipeline which they want to finance, particularly within the infrastructure and power sector space and there’s need for them to take caution in Q1,” he said.
“I expect a good number of these transactions to flow in in the third quarter of the year and that’s going to be a good driver for earnings going forward.”