Nigeria's equities market closes flat

Nigeria's equities market ended on a flat note today, marking the first time this week that it failed to see an uptrend. The NSEO share index closed at 28,027 points, signaling a possible stagnation in the market. The currency market, however, showed a bit more resilience with the Naira holding relatively stable in the official market and strengthening in the parallel market at $462.00. Abiodun Keripe, Head of Research at Elixir Investment Partners, joined CNBC Africa to provide insights into the trading day and the potential impact of forex market fluctuations on the equity market. Keripe highlighted the significant supply gap in the forex market coupled with policy fluctuations, particularly from the Central Bank of Nigeria. He noted that these factors have implications for capital flows into the equity market, leading to a drop in capital inflows. This could be detrimental to listed companies operating in the Nigerian economy, exposing them to volatilities in the FX market. Companies like PZ, for instance, have already reported substantial FX losses, reflecting the challenges faced by businesses due to policy uncertainties in the forex environment. Moreover, the equity market is likely to witness lower profits for listed companies, potentially resulting in reduced dividends and a negative impact on investor sentiment. Keripe cautioned investors to brace for a difficult period in the equity market and advised them to focus on companies with a consistent dividend payment track record. By adopting a dividend strategy and closely monitoring risk exposure, investors can navigate the current market uncertainties. In light of the prevailing challenges in the equity market, Keripe advised investors to consider fixed income instruments as an alternative investment avenue. Despite the bleak inflation outlook, fixed income instruments might offer a relatively better return compared to equities. With T-bills emerging as a more attractive option than bonds in recent times, investors could position themselves to capitalize on the higher yields provided by T-bills. The flexibility in T-bills' investment horizon also allows investors to adjust their market positions based on evolving market trends. As Nigeria grapples with economic uncertainties, the investment landscape appears fraught with challenges. However, strategic investment decisions guided by a prudent risk management approach could help investors navigate the storm. Keripe's insights shed light on the importance of diversifying investment portfolios and staying vigilant in a volatile market environment. Overall, the outlook for Nigeria's equities market remains uncertain, with forex market volatilities posing a significant threat to the stability of the equity market. As investors tread cautiously in these turbulent times, the need for a sound investment strategy anchored on dividend yields and risk management becomes paramount.