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Net Asset Value of Mutual Funds Grows 159% in Five Years

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the Sovereign Wealth Funds (SWFs)
  • Net Asset Value of Mutual Funds Grows 159% in Five Years

The net asset value (NAV) of mutual funds in the Nigerian capital market grew by 159 per cent from N102 billion in December 2012 to N264billion in April 2017, according to data from the Securities and Exchange Commission (SEC).

Mutual funds are pools of funds that a professional Fund Manager brings together from various individual investors to invest in selected underlying securities for the benefit of the investors. The underlying securities can be one or a combination of stocks (shares), money market instruments, fixed income securities, real estate, and commodities.

Data from SEC indicated that the NAV of the funds have grown by N162 billion in almost five years. However, despite the 159 per cent growth, the relative size of the NAV to gross domestic product (GDP) remains low and relatively unchanged over the period at 0.2 per cent in 2012 and 0.3 per cent in 2016.

Compared to other countries, the NAV ratio to GDP is very low, hence analysts at FSDH Research said there is need to put more efforts and introduce more incentives to develop the mutual fund segment of the Nigerian financial market.

According to FSDH, available data from DataMarket on the ratio of mutual fund assets to GDP for some selected countries between 2012 and 2014 shows that Nigeria recorded the lowest figures.

For instance, the ratio of mutual fund assets to GDP in United States in 2014 was almost 90 per cent, while that of South Africa was about 40 per cent. India and China was about nine per cent, while that of Nigeria is about 0.3 per cent.

“This shows that more efforts and incentives are required to develop the mutual fund segment of the Nigerian financial market,” the analysts said.

They advised investors to patronise mutual funds because of the numerous benefits.

“The main benefits relate to the fact that the pooling of a large number of relatively small investment sums enables small investors to gain access to all the benefits of a professional investment adviser.

Aside from the choice of the underlying investment being made by an experienced investment the benefit of portfolio diversification which (s) he would not have been able to achieve otherwise. The pooling of the funds also permits the Fund Manager to achieve lower transaction costs than would be possible for individual investors,” the experts said.

They explained that these benefits translate to the achievement of superior returns, adding that the existence of a trustee and custodian ensures the safety of the investments as the assets of the mutual fund are held by a custodian and are in no way co-mingled with the assets of the Fund Manager.”

“All these ensure that even small investors have access to wealth creation opportunities that were previously considered to be the preserve of the wealthy. For all investors (large and small), investments in mutual funds ensures that a professional is constantly assessing the fund, making decisions to exit certain investments that may have peaked in value in order to enter new ones where the opportunity for superior returns has been identified,” they said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Investment

Saudi Arabia Aims for $80 Billion Tourism Investment to Fuel Vision 2030 Goals

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Saudi Arabia is embarking on a bold venture to attract up to $80 billion in private investment into its burgeoning tourism industry, a move pivotal to realizing its ambitious Vision 2030 objectives.

Tourism Minister Ahmed Al Khateeb unveiled the kingdom’s aspiration during an interview in Riyadh, emphasizing the imperative role of the private sector in spearheading investment endeavors.

With plans to disburse approximately $800 billion on tourism over the next decade, Saudi Arabia is steadfast in its pursuit to diversify its economy and reduce dependency on oil revenues.

Vision 2030 outlines a trajectory for the kingdom to metamorphose into one of the world’s premier tourist destinations, targeting 150 million annual visitors by 2030, a significant portion originating from overseas.

While the government and sovereign wealth fund have historically fueled tourism development, securing substantial foreign direct investment, particularly from the private sector, emerges as paramount in expediting Vision 2030 initiatives.

The kingdom’s fiscal projections, forecasting deficits until 2026, underscore the urgency of engaging private investors to actualize the ambitious tourism blueprint.

Saudi Arabia, having welcomed 100 million tourists in 2023, predominantly domestic travelers, eyes international markets such as India, China, the UK, France, and Germany for tourist influx.

A new program launched by the Ministry of Tourism aims to streamline investment processes, potentially unlocking $11 billion in private investment, bolstering Saudi Arabia’s tourism trajectory and reshaping its economic landscape.

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CBN Unveils Plan to Settle N1.64 Trillion Treasury Bills in Q2 2024

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FG Borrows

The Central Bank of Nigeria (CBN) has announced its strategic approach to managing liquidity and meeting financial obligations by unveiling a comprehensive plan to settle Treasury Bills (TBs) worth N1.64 trillion during the second quarter of 2024.

This initiative, part of the CBN’s Nigeria Treasury Bills Issue programme, aims to regulate the money supply within the economy while effectively managing liquidity dynamics.

According to documents obtained by Investors King, the TBs settlement program is slated to commence on March 7th and conclude on May 23rd, 2024.

The CBN will focus on settling TBs with varying tenors, including N414.29 billion on 91 days, N43.74 billion on 182 days, and a substantial N1.18 trillion on 364 days.

The breakdown of the settlement plan reveals monthly settlements to address maturing TBs. In March, the CBN plans to settle N660.62 billion worth of TBs, followed by N292.17 billion in April and N688.3 billion in May.

Market analysts interpret this move as a testament to the CBN’s commitment to managing financial obligations and maintaining economic stability.

It provides investors with opportunities to engage in short-term financial instruments while contributing to overall liquidity dynamics.

The strategic settlement plan reflects the CBN’s proactive stance in navigating economic challenges and ensuring stability within the financial landscape.

As the apex bank implements these measures, stakeholders will closely monitor their impact on market dynamics and economic indicators, anticipating implications for investment decisions and monetary policy outlooks.

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China’s State-Owned Lenders Allocate $8 Billion to Revitalize Property Market

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General Images Of Residential Property

China’s state-owned lenders have committed a substantial $8 billion in loans to rejuvenate the country’s beleaguered property market, aligning with Beijing’s directives to bolster the sector.

Agricultural Bank of China Ltd. disclosed approving over 40 billion yuan of loans for real estate projects on predefined white lists, signaling a proactive approach towards supporting the housing market’s recovery.

China Construction Bank Corp. also joined the effort, extending 3 billion yuan to five property projects, with plans to greenlight over 20 billion yuan in loans soon.

Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. are among the institutions offering financing assistance, although the exact loan amounts remain undisclosed.

This initiative follows Beijing’s recent call for local authorities to enhance financing support for developers and curate lists of eligible projects.

In response, the big four state lenders pledged to meet reasonable financing demands from developers and projects identified under the coordination mechanism.

However, China’s property market faces challenges despite these measures. New home sales plummeted 34.2% year-on-year, underscoring the ongoing slowdown.

While existing home transactions surged during the Spring Festival holiday, new home sales remained subdued, prompting a cautious outlook among buyers.

The infusion of $8 billion aims to instill confidence and stimulate activity in the property sector, potentially heralding a gradual recovery amid persisting market uncertainties.

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