Ayodeji Ebo on what strategies to follow in Nigeria’s equity market

Nigeria’s equities market has been on a winning streak, with the rally continuing for the 11th straight session. This impressive run has been fueled by investors showing strong interest in MTN Nigeria’s shares. Ayodeji Ebo, the Managing Director of Afrinvest Securities, recently shared insights on the market's performance and what strategies investors can follow in the dynamic equity market of Nigeria. The current market landscape in Nigeria is witnessing a significant shift due to changing policies. The low yield environment in the fixed income space has prompted fund managers and portfolio fund administrators to increase their exposure to equities. This shift has led to more local participation and institutional investment in the market. The focus has been on dividend yield perspective, with the banking sector offering attractive opportunities with double-digit average dividend yields. However, the market's overall performance is heavily dependent on the presence of supportive fiscal policies to drive sentiment and attract foreign investors. Ebo emphasized the need for policies that would sustain investor confidence in the market and encourage foreign investment. While local investors, particularly portfolio fund administrators, are increasing their exposure to equities, the market still requires strong support to keep the momentum going. Ebo highlighted the importance of a balanced approach and cautioned that without significant policy drives from fiscal authorities, the market's growth might be limited. Despite the optimism surrounding the equities market, Ebo also highlighted the risks associated with excessive reliance on equities over fixed income investments. He pointed out that without substantial policy support in the medium to long term, the market could face challenges in attracting sustained investments. Ebo stressed the importance of government policies and the need for a collaborative effort between monetary and fiscal authorities to drive market growth. When discussing potential market catalysts, Ebo mentioned key sectors like power and oil & gas, which could benefit from policy reforms and implementation. He highlighted the importance of reviewing the Power Sector Reform Act and the Petroleum Industry Bill (PIB) to boost confidence and attract investment. Additionally, Ebo suggested phasing out subsidies in the oil and gas sector could free up funds for critical capital expenditure projects, ultimately enhancing market confidence and attracting foreign direct investments (FDIs). In conclusion, Ebo underscored the importance of clear, investor-friendly policies to support sustainable economic growth and attract both local and foreign investments. He emphasized the need for confidence-building measures, such as revising public-private partnership (PPP) policies, to stimulate growth and create a conducive environment for long-term investment in Nigeria’s equity market.