Where to Invest N1 million in last quarter of 2022

The Nigerian All Share Index dropped by 0.07% to close trading at 47,565.92 points at the close of trading yesterday.

The build-up to the 2023 election has kept foreign investors at bay and sell-offs by domestic investors deepen.

Also, the decision of the Central Bank of Nigeria (CBN) to increase the interest rate by 15.5% has further depressed investors’ appetite for equities to embrace money market instruments.

The ASI rose to as high as 54.085.30 on May 27, 2022, but has since dropped by 6,553 basis points or 12.12%.

The depreciation being witnessed in the market where most stocks hit their record lows, offers attractive entry opportunities for discerning investors. That’s why investors should renew positive sentiment in the local bourse to increase capital gains and reap big dividends at the year-end.

Rather than avoid the market following the bearish stance, there’s still money to be made if investors are in the right sectors. That means looking at some of the sectors that have been the best-performing despite the fact that the economy is struggling.

According to Nairametrics’ chat with some investment analysts, the banking, industrial goods, and telecommunications industries are stocks to buy in the last quarter of the year (Q4 2022) as they are expected to do well given their half-year performance, which has been decent.

They noted that given that the share prices of the companies quoted in these industries are dropping makes it is more attractive, hence this is the time for investors to accumulate the stocks to reap bigger dividends at the end of the year.

So if you have 1 million and above in the stock market, where do you invest? This is what the analysts are saying.

What investment analysts are saying

Mr. Victor Chiazor, Head of Research and Investment, FSL Securities Limited, speaking to Nairametrics on sectors to invest in the last quarter of the year said the equities market is expected to struggle for a while given the high-interest rate environment.

He noted however that the banking industry, industrial goods industry, and telecommunications industry are expected to do well given their half-year performance, which has been decent.

“As prices of most these stocks continue to plummet due to the macro issues, this is expected to make these stocks very attractive to the astute investors as dividend yields will become higher and the possibility of higher capital gains are visible.

“With the likes of Zenith UCAP and GTCO returning a dividend yield of 15.86%, 13.64%, and 17.65%, while MTN and Lafarge returning a dividend yield of 6.59% and 8.51% outside a possible capital appreciation, it is expected for bold investors to start accumulating these stocks ahead of the year-end earning season,” he said.
Mr. Mike Eze, managing director, of Crane Securities Limited said:

“Even in an economy where par capital income is less than a dollar and GDP is below average, the banking industry is always the veritable area, particularly this last quarter of the year. Banks such as Zenith Bank Plc, UBA Plc, GTCO Plc, Access Bank Plc Fidelity Bank Plc, and Stanbic IBTC are good investment destinations for the last quarter.

“When they were marked down for interim dividend, their prices started going down and that is to the advantage of investors. This is a good area to invest in now as against the end of the year when they will pay their dividend. Investors should gravitate towards those high-flying banks.

“After the crash of 2008 when the leading world economies collapsed, including the emerging economies, the banking sector still reared up its head because people could not afford to put their resources/ investments under their pillows and in the comfort of their homes. They must approach the banks; therefore, the banks even in emerging economies must be an area where people will put their investments.

“The NASD OTC alternative market also offers a very attractive option at this time of the year. WAMCO, CSCS, and Niger Delta stocks listed on the NASD are areas where investors should invest their funds to reap high dividends and capital gain by the end of the year."

Kasimu Garba Kurfi, chief executive officer and managing director, of APT Securities and Funds Limited said:

“The NGX market is very low pricing of most of the stocks in the world, very attractive to both short term and long-term Investments, some of the stocks are trading between 12 to 24 months low. In terms of dividend yield, most of them are trading at double-digit yield, and in terms of PE ratio, most of the stocks are trading in less than 5 ratios. 

The most attractive stocks are banking shares, with GECO @ N17, ZENITH @N19, Fidelity @ N4.60, ACCESS @N8.70, UBA @N7, and Stanbic @N28. Another industry is telecommunications, with MTNN @N190, building materials such as BUACEMENT @N54, WAPCO  @N22, and Dangote Cement @N220 among others.

As the election year is coming there will be more demand for cement to complete outstanding projects and areas damaged by flood. The subscription to 5G and transfer funds will increase revenue”.

Mr. David Adonri, executive vice chairman, of Hicap Securities Limited, said:

“Every industry or company has stocks that have potential but the banking industry is the industry to pick. Zenith Bank, GTCO, Access, UBA, Fidelity, and Stanbic IBTC are preferred stocks to invest in during this last quarter of the year because they are income-generating stocks in terms of dividends.

“Dividend yield in the telecoms industry may not be as high as in the banking sector but stocks like MTNN and Airtel offer growth potential. Industrial goods are also good to pick for the last quarter earnings; Cement companies like Dangote Cement, Lafarge Cement, and BUA Cement have good potential”.