The stability and alignment of fiscal, monetary, and trade policies in Nigeria, will have a positive impact on the capital market in 2021. Group Managing Director, Cowry Asset Management Mr. Johnson Chukwu said in a discussion on the “Global Economic Developments In 2021 & Implications for The Nigerian Capital Market”.
According to Chukwu the inauguration of Senator Joe Biden as the 46th President of the United States of America will mark a shift to pro-people policies and a tax system that would change the effect of taxes on corporate bottom lines.
This is where he expects Nigeria to reposition its trade and investment policies to become the destination of choice to attract capital outflows from the USA.
He said “Increased taxes on corporates in the Biden administration, will see them looking overseas for investments. Frontier markets like Nigeria with the right policy mix can attract billions of dollars in investments”.
Following the concerns of the second wave of COVID-19 and the implications for reopening the economy and the financial markets fully, Chukwu said the rollout of vaccines in the USA, UK, China, India, and the EU would build back confidence in the markets.
In the case of Nigeria, he believed there should be an extra-budgetary provision for COVID-19 vaccines in the country, and states should also take up the mandate to develop their strategies and collaborate with the Federal Government.
Looking at the equities market, the stockbroker noted that the accommodative monetary policy measures of the CBN in 2020 would not be sustained in 2021, which will likely have an impact on the remarkable market rally.
He also highlighted the fact that the macro-economic environment and its fundamentals, will go a long way in determining the performance of the equities market.
On the “Demutualization” of the Nigerian Stock Exchange (NSE), Chukwu said the step taken by the NSE to demutualize is a welcome development as it will open up the equities market to increased activities and investments.
Giving his views on the fixed income and bonds market, the economist and capital market analyst lauded the plans of the Lagos and Edo state governments to access the debt market with N100bn and N25bn instruments respectively, describing it as the right strategy for developing critical infrastructure.
With the increasing appetite of companies that are leveraging the debt capital market for commercial papers, the GMD of Cowry Asset Management advised them to go for the long-term in their approach and strategy to expand their operations and retain market value.
Speaking on the activities of the Unlisted OTC securities market and the drive by the NASD Plc for digital operations, he stressed the regulatory steps and guidelines from the Securities and Exchange Commission (SEC) for crowdfunding and digital currencies like cryptos would be crucial in the year.