Will MPC's less hawkish stance boost Nigeria' equities?

In a recent CNBC Africa interview, Pabina Yinkere, the Managing Director at Norrenberger Asset Management, shed light on the current trends in Nigeria's equities and fixed income markets following the less hawkish stance of the Central Bank of Nigeria's Monetary Policy Committee (MPC). The committee's recent decision to hike the key benchmark rate was largely in line with market expectations but emphasized the ongoing challenge of inflation, which spiked to 33.88% in October. Despite the tightening measures, Yinkere highlighted the resilience of the equities market, which has outperformed expectations, returning over 30% year-to-date. Yinkere pointed out that while the fixed income market experienced some reactions to the rate hike, the equity market remained robust, driven by specific sectoral events and strong earnings projections. He noted that the banking sector, in particular, had shown impressive performance, with strong quarterly numbers expected in Q3. This strength in the banking sector has bolstered overall market sentiment, providing opportunities for institutional investors to increase their exposure to equities. Looking ahead, Yinkere expressed a sense of cautious optimism among investors due to lingering inflation concerns and the potential for further tightening measures. However, he highlighted the positive outlook for businesses, as reflected in the recent CBN Purchasing Managers' Index (PMI), which indicated ongoing growth in business activity. Reflecting on the trading month of November, Yinkere described the market performance as topsy-turvy, with bullish sentiments in the equity market and bearish trends in fixed income. As the month drew to a close, he anticipated improved market performance in December, with investors positioning for full-year earnings and dividends. Overall, Yinkere encouraged investors to remain cautiously optimistic, assess risks carefully, and capitalize on opportunities across both the fixed income and equity markets. Despite the challenging economic environment, he emphasized that there are avenues for growth and investment within Nigeria's financial markets.