Namibian Fund Managers remain optimistic about the outlook for trading on the Namibian Stock Exchange (NSX) in 2023, with 56% of respondents in a recent Simonis Storm survey anticipating higher activity compared to 2022.
According to the survey, Namibian Breweries, Firstrand Namibia, Paratus Namibia Holdings, Standard Bank, Mobile Telecommunications Limited (MTC) and Letshego Namibia were the most attractive NSX-listed stocks among portfolio managers.
This is a slight change from the previous year’s survey, where Standard Bank, Letshego and MTC were not among the top picks. Oryx Properties was the third most attractive stock in 2022’s survey.
When it comes to earnings, fund managers are cautiously optimistic, with 56% expecting earnings to be flat and 44% expecting only a slight increase. If given the opportunity, some portfolio managers would consider investing in the fintech and energy sectors.
The survey also found that the majority of fund managers prefer a pay special dividend as a corporate action from NSX-listed companies with excess cash on their balance sheets.
The preference for cash has increased since the previous survey in 2022, with “hold and wait” and “look for expansion opportunities within Namibia” being the second and third most preferred corporate actions after the pay special dividend.
However, some portfolio managers expressed concern about increasing the local asset requirement within Regulation 13, as well as policy uncertainty that affects sentiment and foreign direct investment. They also suggested that regulation on financial advisors should increase to ensure they are properly educated and that retirees should be allowed to withdraw more than one-third of their pension fund as a tax-free benefit.
Trading volumes for primary listed stocks have steadily increased over the last three years, and the recent survey results suggest that this trend could continue in 2023. Currently, almost all primary listed stocks are in the green, with only Paratus slightly down. However, the illiquid stock market continues to cause major price jumps.
With the average international stock market up 7.5% year-to-date, the JSE up 9.0%, and the local NSX Index up 2.4%, the outlook for the local stock market remains positive, with a net downward movement in local bond yields and relatively flat to marginally negative movement in interest rates or yields on shorter-term money market instruments.
“2023 is off to a good start,” says the survey, “with risk sentiment favoring emerging market equities, higher economic growth prospects for emerging markets, and a positive outlook on earnings growth for locally listed stocks.”
