Analysts forecast bullish week for financial services sector
A cross section of capital market analysts have predicted sustained bullish run for financial sector stocks, mainly the banking subsector sector and by extension, the insurance subsector sector.
Some of the analysts’ predictions for the week maintained a bullish run for quality financial stocks, most of which are trading low based on mark down following 2017 corporate actions.
For instance, Investment One Analysts report week’s forecast said “We remain positive on both quality Banking and cement stocks on continued elevated interest rate regime and potential for increased government capex spending”
The report pointed that the need for more capital expenditure by government will create increased demand for funds which the banks would either provide through taking part in government debt instruments or Treasury Bills (T-bills).
The banks are also positioned to render short term lending to contractors executing government contracts. This also guarantees earning opportunities for finance sector.
The report said that preference for quality names and companies with history would ensure attainment of investor’s investment objective within target period. “We highlight potential for profit-taking on the index.
Nonetheless, we see this presenting entry opportunities in our recommended quality names. Hence, we advise investors to stick to quality names over an extended investment horizon.
The Investment One analyst’s week preview further noted “While recent rally has seen valuation a bit stretched, we still see on the average c.15% potential upside in UBA,
Zenithbank, Access and Dangcem. We point out that GTB remains our core holding over the medium to longer term”
The forecast further sees positive performances of the consumer goods sector during the week, going by prevailing opportunities provided by price increases and federal government’s ongoing foreign exchange reforms.
“We expect Consumer names’ earnings to see support from price hike and recent reforms in the FX market.
In the near term, the ASI performance would continue to see support from recent reforms in the FX market leading to establishment of I & E window as well as new PFA guideline which required increased investment allocation to equity”
The report further highlighted that developments this week, such as the Monetary Policy Committee meeting to hold between 22nd and 23rd of May 2017, the NBS expected release of Q1 2017 GDP Data.
Data on April 2017 FAAC disbursement to be published by NBS 24th May, are likely to shape the equities, money and debt instrument markets.
