SSA Report: Nigeria 2024 Macro Outlook

2024 Macro Outlook and Equities Investment Positioning

On the global scene, the key themes that seems to be in play currently are trade route & supply chain disruption, coupled with rising geopolitical conflict in the Middle East region and China/Taiwan conflict that could have a severe impact on the global Semiconductor Market and Commodity market at large.

The commodity market, specifically Crude Oil has remained largely muted despite the rising conflict in the Middle East - Red Sea region. However, CBOE Crude Oil Volatility Index is at equilibrium which also coincides with an extended consolidation in Crude Oil on the daily chart, and potentially to remain within the range until we have some volatility that causes a shift out of the range.

Nigeria Equities Outlook 2024

In 2023, the Nigeria Equities market had a bullish season primarily due to market acceptance of the friendly reforms by the President Tinubu towards restoring the country on the path of growth, coupled with positive corporate performance majorly in the Banking Industry as they benefitted from FX revaluation gains.

2024 will be focused on the continued reforms set in pace in 2023, and steady positive improvement in business environment to end the closure of mid-large sized business, as we saw the exit of some multinational companies late into 2023. Additionally, security seems to be a big deal in 2024, as we have seen rising epidemic of kidnapping and robbery, which would also impact movement of goods and services.

Essentially, 2024 focus from investors will be on:

• Macro Economic Conditions via key indicators - primarily from the Central Bank end

• Growth in Foreign Portfolio Investment (FPIs)

• Stable FX Market

Equities Market Potential Key Factors

Aligning with the agenda of the President and some infrastructural development investment in play, the Oil & Gas sector will be a key factor to watch as Dangote Refinery starts producing Crude Oil. Furthermore, last year wasn’t the season for the consumer goods sector except for Dangote Sugar and NASCON Allied Industries which posted some gains primarily due to merger & acquisition anticipation.

Dangote Sugar and NASCON Allied Industry

Furthermore, as the nation pivots towards privatization of electricity production and generation, Transcorp and Geregu seems to be the leader within this niche, albeit with Flourmills signaling an attempt to also diversify its operations into this sector.

The Oil & Gas sector will also be a key area of focus in 2024, as it serves as one of the major means to generate FX income, as such there are anticipated listings of Oil majors and an increase in LNG and Crude Oil production, as such key players within this sector are likely to benefit immensely in 2024.

Additionally, healthcare investment is also a major point of focus for the current administration, and with GSK Pharma leaving the Nigeria market and converting to a distribution led model, Fidson Healthcare is the next largest player domiciled domestically and listed publicly, then we have Emzor Pharmaceutical and the likes of May & Baker that could benefit significantly from investments in the sector.

There are also expected listings in the Real Estate, Oil & Gas, Insurance and Industrial sector.

The Financial and Insurance sector will contend with regulatory actions, as the CBN hinted on the need for Banking Recapitalization to accommodate and drive the growth of the Nigeria economy, while NAICOM has also hinted on the adoption of a risk-based capital framework in 2024. I had written a research on Banking Recapitalization in the context of the Nigeria economy, so take a dive there:

Lastly, there will be an increase in infrastructural development/investments in 2024, and the industrial sector will benefit largely from spending on infra development.

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This covers my 2024 outlook for Nigeria Equities market, I hope you find it useful in carrying out further research

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