Stakeholders predict weak 2016 results, sluggish market recovery

Stakeholders in the Nigerian capital market have predicted that the 2016 financial year end results would be depressed due to the harsh operating environment confronting the country.

The expected reduced earnings and losses which would characterize the 2016 financial year result, the stakeholders said, would further worsen the paucity of disposable income, hence the expected dividend payment would either be meager or non-existent.

David Imafidon Adonri, a stockbroker, who spoke to Daily Times, said that 2016 earnings expected to be released in the first quarter of 2017 would be poor, even as very few would break even during the financial year.

Imafidon said that the market recovery measures that have been implemented in 2016 will start having effect in 2017 and the instability in the foreign exchange market will gradually be taken care of. This points to the fact that the market will recover in 2017 as the companies would be expected to have cleaner and predictable operating environment.

“Corporate earnings will be depressed, don’t forget that there is a recession in 2016, and dividend payout will also be depressed.’’

He said that because companies faced very harsh operating environment, and liquidity crunch which negatively impacted earnings, worsening operating expense, and heightened provisioning. According to him, when earnings drop or when companies record loss, the possibility to pay a dividend will no longer be there.

He, however, said that the few companies that will likely pay a dividend for the 2016 financial year in 2017 will likely be higher than expected.

Speaking on measures that will revive the capital market in 2017, he said that countries in stagnation need to embark on policies that would revive the vibrancy of the economy by further boosting business operations and the operating environment.

“The government will have to come up with specific programmes that will be directed at various sectors of the economy. Stagflation, he said, is as a result of the scarcity of goods in the economy.  The supply curve has shifted inwards, what the fiscal and monetary policies have done is to stifle demand.

The stock broker said that the government is yet to come up with specific programmes to beef up the productive sector.

According to him, based on the policy stand of the government and its implication on the economy and companies, many business concerns have left the country.