Nigeria: 2021 Full Year Outlook - Awaiting Dawn

Proshare

Monday, January 18, 2021  / 3:13 PM / By CardinalStone Research / Header Image Credit: CardinalStone  

 

Drawing inspiration from the Irish poem "Second Coming", written in the aftermath of the First World War in 1919 amid a rampaging flu pandemic, we argue that the fate of several countries hangs in the balance in the face of the second wave of the deadly COVID-19 virus. The re-opening of economies combined with slack preventive measures and the evolution of mutated strains of the virus opened the doors to the second wave of widespread infections. The globe's economic fate now rests on the success or otherwise of distributing a few vaccines, with broad expectation skewed in favour of a V-shaped recovery.

 

In Nigeria, the V-shaped recovery is likely to be led by the non-oil sector on the impact of 2020 low base effect, a ramp-up of government spending, increase in credit creation and sustained normalisation of economic activities. The current pace of yield increases is likely to moderate in Q1'21 on the impact of excessive liquidity but pick pace in Q2'21. Our expectation of an eventual pick-up in yields reflects lower OMO maturities, lesser dovish inclinations on macro recovery, and a wider budget deficit. Thus, investors are likely to stay short in the fixed income space. The government could also frontload greater than expected domestic borrowing ahead of a potential pick-up in yields, especially if there are signs that external funding conditions could deteriorate.

 

In the equities market, we expect investors to take advantage of bargain hunting opportunities in cheap, fundamentally strong names with a track record of shareholder wealth creation or veritable evidence of structural breaks from previous constraints. Investors are likely to follow volatilities in these names and try to take advantage of mispricing when they occur.


Please Click Here for the Full Report

 

Proshare Nigeria Pvt. Ltd.

 

Related News

  1. Bracing for a Different Future - Meristem Annual Outlook 2021
  2. 2021 Economic Outlook - Light at The End of The Tunnel
  3. Negative Outlook for Sub-Saharan African Sovereigns as Debt Costs Will Intensify Post Pandemic
  4. The Nigerian-British Chamber of Commerce 2021 Economic Outlook
  5. Q1 2021 FX Outlook: Risk-on Stages a Comeback
  6. Nigeria Economic Outlook 2021: A Shot at Recovery
  7. 2021 Outlook - Is The Tunnel Getting Darker or Brighter
  8. Nigeria in 2021: Positioning in the New Normal
  9. Nigeria 2021 Outlook - Navigating Unsteady Terrain
  10. Fitch Revises Coronation Merchant Bank's Outlook to Stable; Affirms IDR at 'B-'
  11. Nigeria FY 2021 Macroeconomic Outlook - A Break in the Clouds
  12. Nigeria 2021 Outlook: COVID-19 Recession and the Long Road to Economic Recovery
  13. Moody's - Nigeria's Deficit and Debt to Stay High After Coronavirus and Oil Shocks
  14. Moody's Takes Ratings Actions on 32 Banks in Africa Following Update to Country Ceilings Methodology
  15. Risks to Nigerian Banks' Asset Quality Loom in 2021 and Beyond
  16. Moody's Announces Changes in Country Ceilings Following Methodology Update
  17. Q4 2020 Economic Outlook: Out of Reverse and into Second Gear
  18. Fitch Ratings Sees Gradual Recovery for African Banks in 2021
  19. DCSL to hold its 13th Webinar Series Focused on the Year 2020 Business Review
  20. Uncertain Recovery: 10 Macro Trends That Will Shape 2021
  21. Fitch Affirms Seplat at 'B-'; Outlook Positive

 

Proshare Nigeria Pvt. Ltd. 

Proshare Nigeria Pvt. Ltd.

 

READ MORE:
Related News
SCROLL TO TOP