Investment strategy outlook 2023: Soft or hard landing?

5 min readDec 16, 2022


2022 has been a highly challenging year for many investors.

We’ve seen the Russia-Ukraine conflict, high inflation, volatile markets, and rising interest rates cause disruptions in financial markets across the world.

Will the market outlook improve or get worse in 2023?

In the December edition of The Investment Playbook webinar, our experts dimensioned the issues and shared strategies that will help investors position their portfolios for optimal returns in 2023.

In our usual fashion, participants had the chance to seek clarity on grey areas. Here are some questions and answers from the webinar.

Q1: What is your basis for MPR dropping in 2022? Also, what is your view on the equities market in 2023 and your advice to fund managers in the fixed and equity market space?

Globally, the hike in policy rates was unanimously embraced to nip price pressure in the bud. As a matter of fact, monetary policy authorities with weak monetary policy transmission mechanisms also raised their interest rate to align with others. For Nigeria, the increase in MPR is not only to address inflation; the CBN took this stance to reduce the credit/yield spread between Nigeria and other advanced economies that have raised interest rates.

Inflation is broadly predicted to decline in 2023, thereby providing a clear path for central bankers to taper their rate hikes. We think Nigeria is not an exception.

On the Nigerian stock market, we are cautiously optimistic that the prices of fundamentally sound stocks (largely defensive ones) in the telecom and industrial goods sectors will deliver decent returns. We also believe that a reduction in the policy rate (likely in Q4 2023) could renew interest in banking sector counters.

Fund managers are, therefore, advised to remain nimble as market sentiment could change drastically in 2023 following a major drift in policy direction. The fixed-income market will be more attractive (to active traders).

Q2: Considering our economic analysis, I would love to know the impact of these analyses on the different industries we have in Nigeria, particularly, the financial services/capital market.

With a specific focus on our expectations on inflation, exchange rate, and monetary policy direction in 2023, we believe that the Nigerian capital market (bonds and stocks) will provide unique opportunities for patient and strategic investors. We fully understand that the expected deceleration in inflation and interest rates would be strongly positive for most asset classes, especially stocks and bonds.

Q3: Based on the outlook for 2023 being an election year, what is your advice in terms of taking a position in the equity market?

The recent decline in stock prices, particularly in Q2 and Q3 2022, creates new opportunities for investors that were late to the party in Q1. The election sentiment would not significantly impact the Nigerian stock market, as more than 80% of the market’s participation is by local investors, who are less sensitive to such risks.

Q4: What are leveraged trades?

Leverage trade means taking loans to purchase financial assets.

Q5: Any reason for recommending Angola and Kenya Eurobond?

The fiscal outlook for these sovereigns is relatively strong, with decent discounts to par value. Given the expected rally in 2023, these instruments would provide an attractive return. In addition to that, the USD dollar index is projected to cool off, which is also positive for commodity prices. It’s interesting that these economies depend on commodity exports for fiscal stability.

Q6: There are fears of the possibility of sovereign default, especially with what is happening in Ghana. Is there cause for alarm for FGN Bondholders?

It is extremely unlikely that Nigeria will default on both domestic and external debt. For instance, Nigeria’s external debt service is about $1.0bn per annum as against over $35.0bn in foreign reserves. The debt service to revenue ratio also moderated to less than 100% in August. A lower interest rate environment in 2023 will certainly strengthen debt service.

Q7: Is the Afrinvest Eurobond fund measured on a fair value basis or amortised cost approach? What is the YTD price performance of the Afrinvest Eurobond fund?

The YTD of the Afrinvest Dollar Fund is 8.42% as of 13th December 2022.

Q8: Are FGN saving bonds safe to invest in, and what are the risks involved?

FGN Savings Bonds (FGNSBs) are debt securities of the Federal Government of Nigeria and are backed by the full faith and credit of the Federal Government, hence FGNSBs are safe to invest in.

Q9: How does your house view the likely trajectory of the Naira yield curve over 2023? Is it a down-up or up-down view? Any more policy rate hikes over the year?

We expect the excess liquidity to drive yields lower in Q1:2023 up until April while liquidity thins out to close the year. Hence, despite the uncertainties in the fixed-income market, we anticipate yields to trend lower in 2023.

Q10: How can I invest in Afrinvest Eurobond with my NGN?

Afrinvest does not offer currency conversion services. To invest in Eurobonds or any of our dollar-denominated products, you would need to source dollars first. Please contact Afrinvest wealth managers at for more information.

Q11: What’s your outlook on the Real Estate industry in Nigeria, given the impact of floods?

We are aware of the ravaging flooding that has impeded real estate activities in over two-thirds of the states in Nigeria. Nevertheless, real estate investors still find the sector very viable due to the huge housing deficit in the country. We believe sophisticated investors will prioritize ecological concerns and its mitigants before investing. At the same time, real estate developers will also ensure structures are erected with these concerns addressed to maximize return on investment.

Q12: How can one get to buy foreign company shares?

Foreign company shares are tradable on registered broker platforms. Please contact Afrinvest Securities Limited at for more information.

Q13: Does Afrinvest offer Margin facility?

No, we do not offer marginal facility.

That’s a wrap! The full webinar recording is available on YouTube.

Remember, our goal is to simplify investments for you. A visit to our website will show you how we can help you reach your financial goals.

Till the next webinar, keep investing!




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