Parthian partners offers recipe for fixed income, equities investment in 2023
Leader in global fixed-income, equities market and structured finance, the Parthian Group has offered a willing and discerning an idea of where they should you be investing in 2023.
Speaking at the February 2023 forum of the Finance Correspondents Association of Nigeria ( FICAN), the duo of Oluwaseun Dosunmu, Head of Investment Research, Parthian Securities and Ronke Akinyemi Head, Global Markets at Parthian Partners advises investors stay short and liquid, take advantage of higher yields and invest in dollar assets – Eurobonds as well as dollar placements bearing in mind that the rules about diversification still stands.
The theme of the forum was “Assessing Nigeria’s Financial Sector and Outlook for the Economy in 2023”.
In his presentation, Mr.Dosunmu said those with interest in equities market should focus on : top 20 fundamentally strong stocks in terms of market capitalization in the Nigerian Exchange; stocks that are liquid and those that pay good dividends.
He said the dominance of domestic investors in the Nigerian equities market is a good development because it shields the market from the impacts of funds outflow from emerging markets and global headwinds.
On what to expect from the market that will guide investment decisions Mrs. Akinyemi said there will be Public-private partnerships to reduce pressure on budget
funding, just as there will be debt issuances on the back of these partnerships and opportunities to invest in these issues.
“Uptick in interest rates is however anticipated in second quater, resulting from a reduced level of liquidity and huge budget deficit
“We expect the market to commence this year with some depression in yield, owing to expected liquidity elevation in first quarter,” she stated.
Generally, the investment expert noted that the market is expected to be choppy and largely driven by political transitioning, oil price fluctuations, trade wars, possibility of interest rate hikes by other economies and risk off/on sentiments.
According to her, the Monetary Policy Rate (MPR) is likely to increase and credit conditions may remain tight in Q1-23.
Further, the experts agreed that there will be increased financial speculation and weakened investors confidence
Earlier, Akinyemi had recalled that after the Q2-2022 selloffs triggered by higher interest rate in the fixed income market, the Nigerian stock market was volatile with many stocks trading at substantial discounts and delivering greater dividend yields than fixed income space.
As such, the stock market created a massive opportunity for bargain hunting from mid Q2 to Q4 2022, pushing the 2022 year-to- (YTD) return to 19.98percent..
On a positive note, she said there was improved growth level as the economy
began to recover from the impact of the pandemic.
Nigeria became one of the first sovereigns to access funds from the International Capital Market since the start of the Russian-Ukraine war,when it raised about $1.25billion on a 7-year paper at a yield of 8.375percent.
Since issuance in March 2022, the yields on the Nigeria 7-year Eurobond
issue have increased by 2.5percent points to 10.9percent as of 30th June 2022, from
the 8.4percent recorded on 18th March 2022.
She said Non-performing loans are likely to increase among lenders as high borrowing cost might raise default risks. PSB license might erode banks’ Non-Interest Revenue
” Regulatory blocks remain a risk for the industry, even as the sector will benefit from improved economic activities
“High borrowing cost to weigh on business profits,” she explained.
Parthian Group leverages technology to provide a bouquet of diverse financial services to individuals and institutions , enabling growth at all levels.
The FICAN bimonthly forum is a platform where finance Journalists engage subject matter experts to discuss topical issues, investment, policy implications and the Nigerian economy in general.
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