Key banking, oil & gas stocks drive NGX year-to-date performance
Analysts at Norrenberger have attributed the year-to-date rally in the Nigerian equities market to investors interest in key banking, agriculture and oil and gas stocks. Buy interest in ConOil on Monday lifted the oil and gas index by 0.9 per cent. Ekene Oyeka, a Securities Trader at Norrenberger, joins CNBC Africa for this discussion.
Tue, 21 Feb 2023 14:39:28 GMT
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- The banking sector in Nigeria remains resilient, with sufficient capital and liquidity buffers to withstand macro challenges, according to Fitch. Despite some concerns, analysts are optimistic about the sector's outlook and revenue potential.
- The oil and gas sector has seen a positive performance, driven by factors like Europe's energy shortage and stable crude oil prices. Stocks like Zeppelin have gained favor among investors, thanks to strong earnings and favorable oil market conditions.
- Key factors such as policy changes, geopolitical developments, and sector-specific challenges will influence the growth trajectory of the oil and gas sector. Market participants are optimistic about gradual growth in the industry by the second half of the year.
The Nigerian equities market has seen a year-to-date rally, thanks to the growing interest of investors in key sectors such as banking, agriculture, and oil and gas. The recent uptick in the oil and gas index, led by buy interest in ConOil, is a testament to this trend. Ekene Oyeka, a Securities Trader at Norrenberger, shed light on the factors contributing to this positive performance in a recent interview with CNBC Africa. The discussion covered key sectors driving the market, including banking and oil and gas.
When it comes to the banking sector, analysts are optimistic about the outlook for Nigerian banks. Fitch's assessment of the sector's capital and liquidity buffers suggests that banks are well-equipped to weather macro challenges this year. Despite some concerns around profit-taking and currency swap controversies affecting the banking industry, there is confidence in the sector's resilience. The implementation of necessary infrastructures is expected to further strengthen banks and boost their revenues.
Moving on to the oil and gas sector, Ekene highlighted the positive performance of the NGX oil and gas index, driven by factors such as the energy shortage in Europe and the stabilization of crude oil prices around $80 per barrel. While challenges like oil theft and pipeline vandalization have impacted oil production, the upcoming elections and potential policy changes could create a more favorable environment for the sector. Stocks like Zeppelin have gained favor among investors, with strong earnings and a promising outlook backed by favorable oil prices.
Looking ahead, Ekene emphasized the importance of key factors like the timely removal of subsidies, stability in foreign exchange rates, and global geopolitical developments in driving growth in the oil and gas sector. While uncertainties remain, there is optimism for gradual growth in the industry by the second half of the year. Overall, investor sentiment and market performance are closely linked to policy decisions, geopolitical events, and sector-specific developments.
The Nigerian equities market continues to attract attention from both domestic and foreign investors, with key sectors like banking and oil and gas playing a significant role in driving market performance. As the year progresses, market participants will closely monitor developments in these sectors and adjust their investment strategies accordingly. The outlook for Nigerian stocks remains positive, supported by a mix of domestic and global factors shaping the investment landscape.
