Nigeria's market rebounds

The NSC All Share Index ended 1.5% higher yesterday, led strongly by Dan Koteseman to end the Oil and Gas Index after the market halted its 9-day rally on Tuesday. Philip Anegbe, Research Analyst at ARM, joined CNBC Africa to discuss the recent market movements and provide insights on what to expect in the coming days. Anegbe highlighted the significant gains in the equity market, with a notable 21% increase driven by the banking and cement sector stocks. The surge in the market has been fueled by enhanced foreign portfolio investments flows, facilitated by the opening of the investors and exporters window. This has provided foreign investors with access to market-determined exchange rates, reducing the risk associated with the parallel markets. Apart from the increased foreign investments, positive developments such as the revision of investment guidelines allowing investments in holding companies' stocks and the passage of the petroleum industry governance bill have contributed to the market's upward trajectory. These developments have instilled confidence in investors, leading to a positive market sentiment. The recent market turnaround from red to green, with a 1.51% increase, was attributed to profit-taking after a strong one-month gain. Anegbe noted that while profit-taking was expected after the market's remarkable performance, positive factors like the PIGB passage and the NSCSI weighting increase in the MSCI franchise have buoyed investor optimism. Anegbe emphasized the potential for further market growth, especially in the oil and gas sector following the lifting of the first major and transfer cadres. Stocks like Seplat are likely to benefit from these developments, presenting opportunities for investors to capitalize on the sector's rally. When asked about investment opportunities, Anegbe hinted at the cement sector's strength, driven by price increases that have bolstered top-line gains. He also identified the banking sector, particularly liquid stocks, as favorable options during market rallies. Looking ahead to the coming week, Anegbe highlighted the challenges in the FX market due to the CBN's monetary policy tightening and liquidity constraints. Despite these obstacles, positive economic indicators such as the contraction in GDP being the lowest in quarters and promising PMI readings suggest a path towards recovery. Foreign portfolio investors are expected to seize opportunities in the market, buoyed by recent positive developments. Addressing the Senate's interest rate review, Anegbe expressed confidence in the CBN's ability to maintain its position in the near term. With economic indicators pointing towards a recovery, the pressure on the CBN to cut rates has eased, balancing the need for stimulus with concerns about speculative activities and foreign investments. Anegbe's analysis paints a hopeful picture for Nigeria's market, indicating potential for sustained growth and investor confidence.