The managing director, Morgan Capital Securities Limited, Mr Rotimi Olubi, said, electioneering for 2023 general elections in Nigeria will further increase foreign portfolio outflows and cause Foreign Portfolio Investors (FPIs) to remain on the sidelines.
Olubi said this at a forum organised by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos yesterday.
Speaking on the theme: ‘A review of 2021 Market Performance and Factors that will shape it in 2022’, Olubi listed other factors expected to cause further outflow to include; rate hikes and capital controls by the monetary authorities.
Olubi added that the foreign exchange (FX) would likely come under strong pressure as interest rate hikes in advanced economies would result in portfolio outflows from emerging markets. He noted that domestic investors would be the key players responsible for the movement of the market and liquidity.
“Electioneering, rate hikes, and capital controls by the monetary authorities are expected to cause further foreign portfolio outflows and cause FPIs to remain on the sidelines.
“Even as the economy continues its recovery, corporate earnings of companies in the consumer goods and industrial goods sector are expected to be impacted by high input costs caused by high inflation and higher cost of capital due to interest rate hikes,” he said.
He stressed that, with relatively low infection rates and fatalities from the pandemic, the likelihood of an economic shutdown was non-existent, saying, “the GDP growth is expected to grow by 3.86 per cent in 2022 supported by further improvements in agriculture, manufacturing, services and the oil sector and increased government spending in areas such as advertising, printing, media, among other campaign related sectors.”
According to him, being an election year, government spending is expected to be at its highest complemented by improved oil revenues. This, he noted, would lead to wider fiscal deficit and further increase in an already elevated debt-servicing cost.
On the removal of oil subsidy, Olubi said, the suspension would dampen the impact of high oil prices in the global markets to the federal government’s purse, noting that, the federal government will need to focus on reducing the leakages associated with the current subsidy/under recovery regime. BY OLUSHOLA BELLO and BUKOLA IDOWU, Lagos
The managing director, Morgan Capital Securities Limited, Mr Rotimi Olubi, said, electioneering for 2023 general elections in Nigeria will further increase foreign portfolio outflows and cause Foreign Portfolio Investors (FPIs) to remain on the sidelines.
Olubi said this at a forum organised by the Capital Market Correspondents Association of Nigeria (CAMCAN) in Lagos yesterday.
Speaking on the theme: ‘A review of 2021 Market Performance and Factors that will shape it in 2022’, Olubi listed other factors expected to cause further outflow to include; rate hikes and capital controls by the monetary authorities.
Olubi added that the foreign exchange (FX) would likely come under strong pressure as interest rate hikes in advanced economies would result in portfolio outflows from emerging markets. He noted that domestic investors would be the key players responsible for the movement of the market and liquidity.
“Electioneering, rate hikes, and capital controls by the monetary authorities are expected to cause further foreign portfolio outflows and cause FPIs to remain on the sidelines.
“Even as the economy continues its recovery, corporate earnings of companies in the consumer goods and industrial goods sector are expected to be impacted by high input costs caused by high inflation and higher cost of capital due to interest rate hikes,” he said.
He stressed that, with relatively low infection rates and fatalities from the pandemic, the likelihood of an economic shutdown was non-existent, saying, “the GDP growth is expected to grow by 3.86 per cent in 2022 supported by further improvements in agriculture, manufacturing, services and the oil sector and increased government spending in areas such as advertising, printing, media, among other campaign related sectors.”
According to him, being an election year, government spending is expected to be at its highest complemented by improved oil revenues. This, he noted, would lead to wider fiscal deficit and further increase in an already elevated debt-servicing cost.
On the removal of oil subsidy, Olubi said, the suspension would dampen the impact of high oil prices in the global markets to the federal government’s purse, noting that, the federal government will need to focus on reducing the leakages associated with the current subsidy/under recovery regime.
