The Managing Director, APT Securities & Funds Limited, Mallam Kasimu Kurfi, in this interview with Financial Vanguard, spoke on his expectations for the third quarter, Q3’17, performance of companies quoted on the Nigerian Stock Exchange, NSE, for which their results are being expected to be released soon. He also commented on fund raising by companies as well as his expectation of market performance in Q4:17.
By Peter Egwuatu
WHAT kind of results would you expect for companies quoted on the NSE to come out with in the just concluded third quarter, 2017 period?
Generally, the market is expecting that the Q3 results of companies quoted on the Exchange will do better than second quarter, Q2. This is due to the fact that the country has moved out of recession. Other factors are that the Monetary Policy Rate, MPR, remained unchanged, the introduction of Investors and Exporters Foreign Exchange Widow, the improved confidence of the foreign investors, the increase in the price of crude oil, the return of President Buhari to the country with the active participation in the Presidency. All these and more are expected to have impacted on the economy for which the companies would have tapped some benefits.
Which sector on the NSE do you expect to top in terms of performance indicators?
The banking sector is likely to do better than other sectors. I see the banks performing well in Q3 than Q2 because of the retaining of the monetary policy rate by CBN which ensures high return for most of the banks as well as the intervention of Central Bank of Nigeria, CBN, in the 9Mobile crises which saved many banks from huge provisions of bad debt. The Industrial sectors as well as Agricultural Sector are expected to do better as the availability of US Dollar make easy access to raw materials and better production while the high position taken by the Custom against illegal importation protected many companies.
All things been equal, the All Share Index, ASI of the market will close higher than the current position, the best in the last six years. It can easily be seen that many companies would like to raise fresh capital through Rights Issue something that we did not witness for the last ten years.
So, are you optimistic that many companies will raise funds as the economy improves?
Yes, of course. The recent coming of rights issues after a long break of public issues in the NSE is not a surprise to us. If you observed most of the companies coming with the rights issues, they have core investors amongst their shareholders. Most of the multinational companies rush for same, such as Guinness, WAPCO, Unilever and many others on the way to come. The adoption of rights issues is a trade off of other options for capital injection such as bank loans, corporate bonds and a host of other financing instruments. As Nigeria’s economy continues to recover, it is expected that more companies will be seen raising further funds either by way of rights or public offering.
Do you see the equity market maintaining the uptick in activities this quarter?
Yes, like I said, all things being equal. Once the economy continues to record growth we will see the market bouncing well. The equity market is currently witnessing an uptick in activities. A combination of the change in asset allocation rules for Pension Fund Administrators (PFAs) and opening of a window for investors and exporters has led to a sustained rise in the price of equities. The rising appetite for equities means an equity offer may witness a high level of subscription. The recent improvement in the stock market would revive the primary market, as this is an indication that investors are regaining their confidence in the market.