Vetiva’s capital markets outlook for Nigeria

Nigeria's capital markets have undergone a turbulent ride this year, leaving investors wary. However, Usoro Essien, Head of Research at Vetiva, suggests that there is light at the end of the tunnel as we approach 2020. In a recent interview with CNBC Africa, Essien outlined the key points of Vetiva's capital markets outlook, providing hope for local and international investors looking to participate in Nigeria's markets next year. The theme for the upcoming year is one of cautious optimism, with expectations of a slight improvement in market conditions and economic fundamentals. Here are the key takeaways from the discussion: Investment Outlook for 2020: After two challenging years for the equity market, Essien anticipates a much-needed respite in the coming year. Regulatory interventions and increased domestic demand are likely to boost market performance, attracting investors to undervalued assets. The economy is expected to see positive growth, with the non-oil sector driving GDP expansion. Improved agricultural output, particularly in grain and crop production, is poised to support economic growth in 2020. Despite a forecasted GDP growth rate of 2.4%, Essien cautions that it may still fall below the 10-year average. Foreign Direct Investment (FDI) Prospects: In order to achieve sustainable economic growth, Nigeria needs to attract more foreign investments. Essien highlights the importance of passing the budget on time to kickstart investment cycles and boost capital expenditure. The government's commitment to infrastructure development and key reforms will be crucial in attracting FDI. While the low base suggests an uptick in FDI inflows, Essien acknowledges that more reforms are needed to meet the country's investment requirements. Furthermore, aligning domestic interest rates with inflation rates can help attract foreign portfolio investments, complementing FDI inflows. Looking Ahead to 2020: Essien remains cautiously optimistic about Nigeria's investment climate in 2020. With expectations of improved economic fundamentals and regulatory reforms, the stage is set for a more stable and investor-friendly environment. Encouraging private sector participation in infrastructure development and ensuring timely budget implementation are key factors that can drive economic growth and attract foreign investments. While challenges persist, such as political uncertainties and delayed policy implementation, Essien believes that Nigeria is poised for a positive turn in the year ahead. As investors gear up for 2020, staying vigilant and adapting to market dynamics will be crucial in navigating Nigeria's capital markets.