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Inflation, corporate earnings to drive equity market – Ex-CIS president

A former President of the Chartered Institute of Stockbrokers, Tunde Amolegbe, has said that galloping inflating and the corporate earnings of listed companies are factors that may drive the equity market to outperform the fixed income market this year.

Amolegbe, who is also the Managing Director of Arthur Steven Asset Management Limited, disclosed this on Tuesday at the Capital Market Correspondents Association of Nigeria 2023 market review and 2024 projection, held in Lagos.

On the outlook for both markets, Amolegbe said, “We anticipate gains due to a better macroeconomic landscape and resilient corporate earnings despite ongoing FX challenges.

“The reasons include substantial earnings growth sustaining market sentiment and the potential impact of domestic interest rate policies on borrowing costs and foreign portfolio investment participation.”

“Substantial earnings growth is expected to sustain market sentiment.  The Equities Market is expected to outperform in response to inflation as well as positive corporate earnings report.

“The expectation is that the All-Share Index might see up to  35 per cent  gain in 2024.”

At the close of trading on Tuesday, the year-to-date gains of the NGX ASI stood at 31.89 per cent.

Addressing concerns about the market movement being too fast, Amolegbe said the rate of movement was subjective.

“I will say that whether it is moving too fast or not is not a question I want to dwell on so much. The question I will want to dwell on is whether the pricing is appropriate.

“If the pricing is appropriate, how fast it gets to that price is not relevant. If the market is moving and the pricing is efficient, whether it achieves it in one month or one year is really neither here nor there.

“What we need is price efficiency. Is the market price reflecting all available information at any point in time? If it is, then the rate of achieving it for me is not very important.”

Some analysts had raised concerns about the current movement of the ASI, which indicated that the market was in the overbought region with a pullback imminent.

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