As companies prepare to announce their financial performance for nine months ended September, analysts at Meristem Securities Limited, have advised investors to realign their portfolios to accommodate value and income stocks.
Many of the listed companies are currently in their closed periods ahead of the release of third quarter financial reports in a few weeks.
According to the analysts, challenging business environment, slow economic growth and Nigeria’s susceptibility to oil price volatility remains the key risks facing the country. And these, they said had led to the weak performances witnessed across the different sectors of the economy.
“Economic activities have been largely dampened by delays in the implementation of the government’s capital budget. Likewise, the increased competition and weak infrastructural spending have also hampered growth in the industrial goods sector. Similarly, consumer spending has remained tepid since the exit from recession and this has led to weaker revenues for the fast-moving consumer goods players,” they said.
“In the light of all these, our earnings expectation in the third quarter is quite modest, as we do not envisage a reversal from the prevailing market conditions. While the appointment of the ministers and the economic team by the Presidency should provide clarity on fiscal policy, the need to implement structural reforms that will unlock growth and boost investor confidence remains pertinent,” they added.