MARKET NEWS

The Financial Derivatives company, FDCis projecting a stable Naira and a drop in inflation in the months ahead as data show that the Central Bank has tamed growth in money supply which peaked at 78% in May of last year.

The company also expect a cut of a hefty 50bp in policy rate by the Monetary Policy Committee, MPC when it holds its next meeting.

According to Bismarck Rewane, Managing Director of FDC the next inflation data announced by the National Bureau of Statistics will likely reveal a slight decline to 23.15% while the Naira will trade at about N1,600-N1,650 with the price of PMS falling further to N845 a litre and diesel traading at N950/litre.

Speaking at the last meeting of the Lagos Business School breakfast club, Rewane said FAAC allocation will remain flat at a high of N1.6trn as corporate income tax claw baack reduces liabilities.

He maintained that whereas net foreign reserves have surged and money supply growth has moderated significantly, the national currency the Naira remained undervalued by as much as 26.82%.

Compared to NAFEM rate of N1,599.33 to the dollar, the Naira is undervalued by 27.08% The economist said the average PPP rate of the Naira should be N1,158.50 especially with the US dollar weakening against global currencies 8.7% year to date.

In his presentation to the CEOs attending the meeting, Rewane pointed them to key sectors where they can find value in the near term.

The sectors include power where there is at the moment over 50% of unmet demand as well as the agriculture sector where there remains growing demand for storage, mechanization and processing capacity in a nation grappling with acute food insecurity.

Rewane also spoke about the opportunities in the healthcare and pharmaceutical sectors with rising demand, weak public infrastructure and growing private sector need that is unmet.

All of this translate to huge opportunities in the logistics and e-commerce support services on the back of continuing urban growth and consumer shits that are driving higher demand.

In Nigeria, energy investment remains in the shadows because of policy fog, fx risks and tariffr shortfalls which tend to scare investors from the power sector