Investors in the country’s capital market are optimistic that the next Treasury bill auction slated for this week will boost activities in the fixed income market.
Expectedly, there were no significant movements in liquidity level last week, given the absence of auctions. However, the Open Buy Back and overnight rates declined by 4.83 per cent and 6.66 per cent respectively, to peg average money market rate at 18.55 per cent at the close of the week.
Activities in the Nigerian bond market seemed bearish, as indicated by a 0.04 per cent week-on-week change in average bond yield to 16.14 per cent. Conversely, average yields declined in the T-bills space across all tenors to peg at 17.16 per cent as of Thursday, August 26, 2016.
However, there were mixed reactions in the equities market last week, as the Nigerian Stock Exchange All-Share Index appreciated on three out of five trading days. Consequently, the index pared by 0.72 per cent week-on-week to peg the year-to-date return at -4.16 per cent.
The index gained 1.41 per cent week-on-week, as volume of transactions contracted by 18.71 per cent week-on-week while value of transactions appreciated by 6.76 per cent from the prior week.
The analysts attributed the poor performance of the equities market to profit taking activities on large capitalised stocks, as well as sell-offs of some banking stocks, following the Central Bank of Nigeria’s ban on nine banks from trading in the foreign exchange market on August 23, 2016.
There were 29 gainers and 25 decliners last week. Newgold Exchange Traded Funds led the gainers chart again last week, after gaining 15.56 per cent week-on-week to close at N4,850. Seplat Petroleum Development Company Limited, Forte Oil Plc, Transnational Corporation of Nigeria Plc and CAP Plc followed successively.
Conversely, FCMB Group Plc, AG Leventis Nigeria Plc, Academy Press Plc, Skye Bank Plc and Unity Bank Plc steered the losers chart after their share prices pared by 14.96 per cent, 10.10 per cent, 9.52 per cent, 7.81 per cent and 7.69 per cent accordingly.
Also commenting on the equity market, analysts at Vetiva Capital Management Limited, in the firm’s weekly report, said, “Notwithstanding the positive close of last week’s session, we note that the gains came in amidst strong market volatility as revealed by the intraday chart. We believe this could spell a mixed market open this week.”
On fixed income market, they added, “With tighter liquidity expected to further dampen market sentiment (following Open Market Operation mop up), we anticipate a bearish start to this week’s trading.
“On currency, we expect the ripple effect of the CBN directive to banks and the restriction on certain banks to continue to put pressure on the naira at parallel market.”
Meanwhile, global markets traded mostly lower this past week. Investors stayed on the sidelines for most part of the week as market sentiment was largely shaped by the much anticipated speech of United States Fed Chair, Janet Yellen, and fickle commodity prices.
At mid-week, despite the Purchasing Managers’ Index for Euro Zone coming at a seven-month high, sentiment in European markets remained weak as oil extended losses after Energy Information Administration data revealed a surprise build in US crude inventory.
At week close, global markets remained mostly in the red as Japanese stocks sold off after core consumer prices fell by o.5 per cent year-on-year against an estimate of a 0.4 [per cent drop, prompting concerns over the effectiveness of the Bank of Japan’s stimulus programme.
US markets also traded lower as investors digested remarks made by Yellen.
London Real Estate Company for African Investors Announces its Launch
Wetherby Real Estate, which has been created to source and acquire luxury Serviced Accommodation in Prime Central London on behalf of global investors, has announced its launch. It will be specialising in investment opportunities for High Net Worth individuals from the African continent, although its service is open to investors from all over the world.
The business has been launched by Barbara Chanakira, founder and CEO of the Mayfair based Eaton Property Consultants, another acquisition service but one which purchases a range of residential assets for HNWIs. She has almost 15 years’ experience in the luxury residential sector, overseeing huge property portfolios for HNWIs from across the globe which include those of Gulf State Royal Families and high-profile celebrities.
Wetherby will be operating exclusively in one of Europe’s fastest growing residential classes, Serviced Accommodation. It will only acquire real estate in Prime Central London and tap into huge demand from a global investment audience, which has grown significantly over the last few years as the U.K’s Serviced Accommodation market continues to flourish. Wetherby considers PCL to be one of the globe’s safest and most lucrative investment destinations.
The company is registered in Gibraltar but will be operating out of its London headquarters. Investments are made through the company’s affiliated wealth managers and an FCA regulated Custodian, and Wetherby completes the real estate acquisitions through its UK-incorporated Special Purpose Vehicle. It has already identified a number of attractive prospects in London’s prime postcodes and it plans to expand into other real estate sectors in the future.
Chanakira will be joined by Simon Hall and Augustina Ogbebor, who bring a combined total of over 35 years of experience in investment and advisory services and will be occupying the roles of Non-Executive Director and Head of Investor Relations, respectively.
Hall has over 20 years’ experience advising HNWIs and global corporations on growth and investments, working closely with international developments banks and clients within emerging markets.
Ogbebor’s 16 years in investment banking has seen her work with the likes of JP Morgan, Deutsche Bank, Macquarie and Lotus Capital Ltd; one of Nigeria’s most prestigious fund managers and where she was head of business development.
Barbara Chanakira, CEO of Wetherby Real Estate Ltd, said:
“London’s Serviced Accommodation market has an extremely bright future ahead, which has been compounded by changes taking place in the economy and society more broadly. The ongoing influence of Covid 19 has meant that lower operating costs, better social distancing and self catering benefits have enhanced its appeal, whilst the evolution of an increasingly transient workforce puts the sector in poll position to build upon its rapid growth of the last few years.
London has an immovable social, cultural and economic appeal, and our intricate knowledge of its luxury real estate market as well as our carefully designed investment structure makes for an extremely attractive proposition. We have already identified a number of attractive opportunities and look forward to offering them to our network of investors from Africa and beyond.”
2021’s Major Investment Risks – but Why it Could be a Year of Massive Opportunity
Investment headwinds will “still exceed the tailwinds” in 2021 – but there could be more “major opportunities now than in perhaps the last 10 years” if you know where to look.
This is the bold and, given 2020, perhaps surprisingly optimistic forecast from Nigel Green, chief executive and founder of deVere Group, one of the world’s largest independent financial advisory and fintech organisations.
It comes as investors around the world focus on rebalancing portfolios for 2021, after a year no-one expected.
Mr Green says: “2020 was a year for which nobody had planned.
“This included investors, many of whom were caught spectacularly off-guard by not having properly diversified portfolios, which left them open to untold financial risks.
“Looking ahead to 2021, it is likely that investment headwinds will still exceed the tailwinds – but, I believe, that there are also more major investment opportunities to be had in the next year than perhaps in the last decade.”
‘Headwinds’ are the factors that likely weigh on growth and returns, and ‘tailwinds’ are those that can be expected to boost growth and help drive positive returns.
He continues: “The major long-term headwind from the fallout of 2020 is unemployment, which will hit demand, growth and investment.
“There’s also the roll-out of a mass global vaccination agenda which will be a lengthy process and logistical minefield, plus there are the ‘vaccine sceptic’ concerns to address.
“Meanwhile there are geopolitical issues that could impact on investor returns. These include the significant readjustment that will need to happen following Brexit, U.S.-China trade relations which are likely to become increasingly competitive especially in the tech sector, and the rising border tensions between India and China, amongst others.”
However, despite the significant headwinds, the deVere CEO flags three major investment tailwinds in 2021.
“First, the rollout of the Covid vaccines which means economies can be expected to begin solid recoveries,” he says.
“Second, President-elect Joe Biden will enter office and his administration promises a more predictable approach to trade and foreign affairs – and the markets like certainty.
“And third, it is likely that governments will continue to offer fiscal support packages as their economies recover from the pandemic, offering a ‘floor’ for markets.”
Mr Green goes on to add: “To quote Einstein, ‘In the midst of every crisis, lies great opportunity.’
“This is why, after such a monumental crisis, I believe that if you know where to look and act appropriately to build your wealth, there could be plenty of key opportunities to come.
“The pandemic has accelerated history, speeding up and exacerbating major trends in just a few months, that ordinarily might have taken decades to be fully realised.”
He maintains that the global economy, how we live, do business and interact remains fundamentally changed. “It is doubtful the world will go back exactly to how it was pre-Covid – there are many aspects of the ‘new normal’ which people like and support, just a home working. As such, some of the major shifts are unlikely to be reversed,” he notes.
“As such, investors need to look for the lower entry points of quality companies to top-up their portfolios and, critically, they need to bear in mind how the world has changed.
“Their portfolios must reflect the future, not the past.”
Mr Green concludes: “Headwinds will surpass tailwinds in 2021 as the world readjusts, but it’s essential that investors stay invested. As we know, history has shown us that stock markets tend to go up over the long-term.
“But as the world moves ahead to a post-pandemic era, it’s crucial that investors ensure their portfolios are suitably diversified across asset classes, sectors, currencies and regions, so as to make the most of the considerable opportunities that will inevitably present themselves.”
Global Deal Activity Down by 4.5% in October 2020
A total of 6,304 deals were announced globally during October 2020, which is a decrease of 4.5% over the 6,598 deals announced during September, according to GlobalData, a leading data, and analytics company. An analysis of GlobalData’s Financial Deals Database revealed that the deal volume during October remained below the monthly average of Q3 2020.
Aurojyoti Bose, the Lead Analyst at GlobalData, comments: “After demonstrating growth for four consecutive months, the deal volume shrank in October. The decline in deal activity could be attributed to inconsistencies across different regions. The APAC region remained a weak spot, while deal activity remained mostly flat in North America, and the Middle East and Africa (MEA) region witnessed growth in deal activity.”
North America attracted the highest number of investments, followed by APAC, Europe, the MEA, and South, and Central America.
The uncertain global economic landscape lowered the deal volume in October for major markets such as the US, Germany, Australia, France, India, and China compared to the previous month. On the contrary, the UK, Japan, South Korea, and Canada saw growth of 15.6%,14.9%, 3.8%, and 2.2%, respectively, in October as compared to September’s deal volume.
Bose continued: “Most of the deal types witnessed a decline in volume during October compared to the previous month. Private equity, equity offerings, venture financing, debt offerings, and partnership deals volume decreased by a respective 2.4%, 9.1%, 9.8%, 14.6%, and 24.6% – while the deal volume for mergers and acquisitions (M&A) increased by 7.2%.”
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