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In this report, we will examine the events of the first half of the year, focusing on the global economy, domestic economy and domestic capital market. Afterwards, we provide an outlook for the second half of 2023 as well as investment strategies that will guide investors in making the right decisions.


The year so far has been filled with setbacks in the global economy. Over in the US, we witnessed an historic banking failure following the incessant interest rate hikes by the US Federal Reserve. Consequently, the fear of contagion slowed down the global equities market, especially the banking sector. However, in the later parts of the first half of this year, we witnessed a positive momentum in the market, buoyed by positive sentiments in the tech space. Elsewhere, the Euro area continued to grapple with the impact of the Russia-Ukraine conflict on its economy in first half of the year, with a looming recession in sight.


In the Nigerian economy, structural issues such as insecurity and infrastructural underdevelopment continues to affect food inflation and consumer price levels in the period. Economic growth was further hampered by monetary policy tightening, electioneering activities, and the cash constraint in the first quarter of the year. Hence, the Nigerian economy slowed down in the first quarter of the year ( 2.31% growth vs. 3.52% growth in the fourth quarter of 2022).

For the rest of the year, we foresee a rebound in economic growth. Our outlook for the oil sector is positive, as we foresee the sector exiting the negative territory. We see the non-oil sector recover from the slow-down in economic activities, induced by the cash constraint earlier in the year.


In the Capital market, the equities market fared quite well, despite the banking crisis that plagued major economies in first half of the year. A prolonged January rally (sustained increase in stock prices) amid lower yields in the Fixed income market and more recently, the pro-market policy statement by the new administration, pushed the year-to-date (YtD) performance of the Nigerian equities market to 18.96% as of 30th June 2023. (23.00% as of 7th of July 2023).

Furthermore, we expect an increase in foreign participation in the Nigerian stock market as a result of the unification of the foreign exchange system which is expected to facilitate seamless repatriation of funds. We have already witnessed this trend in the Banking sector, which managed to achieve a positive performance (+54.59% YtD as of June 2023). This trend is expected to persist in the second half of the year given that foreign inflows are expected to join the fray.

We expect the capital market to have a lot of liquidity available in the second half of 2023. This is because the Central Bank of Nigeria is adjusting certain policies which affects liquidity levels in the capital market, and there will likely be more government funds available due to changes in the exchange rate. As a result, we predict that the returns on fixed-income investments will decrease in the second half of 2023.


In the equities market, we believe the positive sentiment we have witnessed would persist as local investors take more position in the market, in anticipation of increased foreign participation. The announcement of companies earnings for the first half of the year and the decision on whether to distribute dividends to shareholders will also affect the market in the second half of 2023. We think that stocks in the Banking, oil and gas, and Industrial goods sector that have strong fundamentals still have room to grow. Unless there are significant changes in government policies that could harm the stock market, we predict that the Nigerian stock market will end the year on a positive note.

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