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Investors Seek Less Risky Assets Amid Political Tension, Others

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  • Investors Seek Less Risky Assets Amid Political Tension, Others

Financial experts have attributed the continued profit-taking in the nation’s stock market to rising yield in the fixed income market and political tension, among others.

The All Share Index of the Nigerian Stock Exchange fell to its lowest point this year last week as some investors sold off their banking stocks.

Analysts at Meristem Securities Limited stated that the increased debt offerings, the rising yield in the fixed income market and mounting political uncertainties drove most investors to seek less risky and high-yielding instruments.

The Chief Executive Officer, Financial Derivatives Company, Mr Bismarck Rewane, told our correspondent that the sell-offs in banking stocks were as a result of the high liquidity of the stocks.

He noted that banks already declared their interim dividends, and the next time investors would be getting any dividends would be April 2019.

He said this, coupled with the high political tension in the country, could be a reason for the profit-taking.

The sell-offs intensified the losses in the year as the ASI and market capitalisation depreciated by 0.44 per cent to close at 32,058.28 basis points and N11.704tn, respectively. The ASI dropped to 31,864.80 bps on Thursday, its lowest level this year.

The year-to-date loss and market breadth closed at -16.17 per cent and 0.67x, respectively, with 24 gainers and 36 decliners emerging last week, as against the 27 gainers and 39 losers recorded in the previous week.

The NSE, in its weekly market report, said the top five gainers for the week were Unity Bank Plc, Flour Mills Nigeria Plc, Prestige Assurance Plc, Glaxo SmithKline Consumer Nigeria Plc, and Niger Insurance Plc, which saw their respective share prices appreciate by 30.99 per cent, 11.69 per cent, 9.80 per cent, 9.55 per cent and 9.09 per cent.

The top five losers for the week were Diamond Bank Plc, C & I Leasing Plc, Eterna Plc, Veritas Kapital Assurance Plc and University Press Plc, whose share prices dropped by 29.69 per cent, 26.43 per cent, 17.43 per cent, 14.81 per cent and 11.93 per cent, respectively.

The financial services industry (measured by volume) led the activity chart with 890.433 million shares valued at N8.113bn traded in 7,923 deals, thus contributing 69.31 per cent and 70.31 per cent to the total equity turnover volume and value, respectively.

The services industry followed with 284.370 million shares worth N585.368m in 298 deals, while the third place was occupied by the consumer goods industry with a turnover of 44.694 million shares worth N 2.054bn in 2,367 deals.

The NSE said trading in the top three equities – Diamond Bank Plc, Ikeja Hotel Plc and FBN Holdings Plc (measured by volume) – accounted for 708.003 million shares worth N1.758bn in 1,957 deals.

It said the equities contributed 55.11 per cent and 15.23 per cent to the total equity turnover volume and value, respectively.

The report showed that all indices finished lower with the exception of the consumer goods and industrial goods indices that finished higher by 0.04 per cent and 1.02 per cent respectively, while the NSE ASeM Index closed flat.

The market closed on a negative note in three days but appreciated marginally on Tuesday and Thursday.

Analysts at Afrinvest Securities Limited described the positive performance recorded at the bourse on Tuesday and Thursday as a “dead cat bounce.”

They said despite increased buying activity in some bellwethers as investors sought to take advantage of attractive pricing, sell pressures dominated trading activities during the week.

“The ASI started the week in the red, losing 0.2 per cent as investors sold off on banking stocks – Zenith Bank Plc, Guaranty Trust Bank Plc and Diamond Bank Plc. Despite the overall negative performance this week, we noticed increased buying activity in bellwethers and we expect this trend to be sustained this week as investors seek to lock-in on the current attractive pricing in the market,” the analysts said.

They predicted that the broad performance of the index would remain weak as investor sentiment would remain pressured by developments in the polity.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Investment

London Real Estate Company for African Investors Announces its Launch   

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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.”

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2021’s Major Investment Risks – but Why it Could be a Year of Massive Opportunity

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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.”

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Global Deal Activity Down by 4.5% in October 2020

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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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