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World’s Five Largest Asset Management Companies Hold $22.5trn in Assets, More than US GDP

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Global Five Biggest Asset Management Companies Hold $22.5trn in Assets, More than US GDP

Institutions and individuals who invest money usually do so with the asset manager’s help, a company that manages their investments and makes a profit for both sides. These firms make well-timed investment decisions on behalf of their clients to grow their portfolio and finances.

According to data presented by Stock Apps, the world’s five largest asset management companies hold $22.5trn in assets, more than the GDP of the United States. With more than $7.3trn in assets under management or one-third of that value, BlackRock represents the leading asset manager globally.

Total Assets Under Management of BlackRock Surged 57% in Five Years

Asset management companies work with several investors, which enables them to reduce the risk, diversify their clients’ portfolios, and provide access to higher-value options with better capital appreciation prospects. In many cases, they make money by charging fees based on the number of assets they manage, although some companies charge flat fees. These firms usually also provide other services than asset management, which generates only a part of their revenue.

The world’s largest asset manager, BlackRock, has become one of the leading players on the financial market over the last 25 years. It serves individual investors, companies, governments, and foundations through 70 offices all around the world. BlackRock also tops the list of largest Exchange Traded Fund (ETF) providers in the United States and has played a huge role in advising the US government during the financial crisis.

In 2015, the total value of assets under BlackRock’s management amounted to $4.6trn, revealed the company’s annual report. During the last five years, this figure surged by 57% to $7.3trn in 2020. Besides leading in the value of managed assets, the New York-based financial giant also witnessed a steady market cap growth in 2020. In September, the total value of BlackRock stocks hit $83.6bn, a 22% jump year-over-year.

With $5.7trn in total assets under management, the Vanguard Group ranked as the second-largest asset manager globally. The US financial company, with 20 locations worldwide and 17,600 employees, is also the second-largest provider of exchange traded funds and the largest provider of mutual funds in the world.

Eight of the top 10 Asset Management Firms are US Companies

UBS Group represents the third-largest asset manager globally, with more than $3.5trn in assets under management. The Swiss financial corporation and the country’s largest bank announced a net profit of $1.23 billion for the second quarter of 2020, an 11% drop year-over-year mostly caused by the continued credit losses amid the coronavirus crisis.

However, higher trading activity continued to support the bank’s earnings between March and June. The Group’s quarterly earnings also revealed an operating income of $7.4bn, compared to $7.5bn a year ago. Statistics show the Swiss lender lost $1.6bn in market capitalization in 2020, with the total value of stocks falling from $45.6bn in December 2019 to over $44bn this month.

State Street Global Advisors and Fidelity Investments ranked as the fourth and fifth largest asset managers globally, with $3.05trn and $2.92trn in total assets under management.

Analyzed by geography, the US asset managers lead on the global list of the most successful companies, with eight of the top 10 asset management firms from the United States. Statistics also show the world’s largest banks like JP Morgan Chase, Goldman Sachs, and Bank of America were not among the top five asset managers in terms of managed assets.

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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Treasury Bills

CBN Set to Auction N166.1 Billion in Treasury Bills Amid Economic Data Releases

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The Central Bank of Nigeria (CBN) has announced plans to auction N166.1 billion in Treasury bills.

This auction comes amidst a flurry of economic data releases and amidst concerns over the nation’s fiscal health.

Scheduled for the upcoming week, the auction will include N27.11 billion for the 91-day tenor, N1.49 billion for the 182-day tenor, and N137.50 billion for the 364-day tenor.

This strategic allocation shows the CBN’s efforts to manage liquidity and control inflationary pressures during global economic uncertainties.

The decision aligns with broader fiscal strategies as the United States and India prepare to release crucial consumer price index reports, expected to influence global market sentiment.

Concurrently, the Organisation of the Petroleum Exporting Countries (OPEC) is set to unveil its monthly oil market report, detailing shifts in global oil supply and demand dynamics.

Nigeria’s economic landscape has recently faced challenges, with May witnessing a dip in oil production to 1.25 million barrels per day, down from 1.28 million in April.

This decline has been attributed to various factors, including oil theft in the Niger Delta and aging infrastructure—a setback impacting national revenue streams.

The Treasury bill auction is a cornerstone of the CBN’s monetary policy toolkit, aiming not only to fund government operations but also to influence short-term interest rates and manage inflation expectations.

Analysts anticipate keen interest from both domestic and international investors, gauging Nigeria’s commitment to fiscal discipline amid fluctuating oil prices and global economic shifts.

Moreover, the stability of Nigeria’s foreign exchange market, marked by the recent convergence of the naira/dollar rate at N1,520 across official and parallel markets, is expected to complement the CBN’s monetary actions.

This convergence signifies progress in the CBN’s efforts to stabilize the currency amidst external economic pressures.

Looking ahead, the outcome of the Treasury bill auction will likely set the tone for Nigeria’s financial markets, providing insights into investor confidence and the government’s ability to manage fiscal challenges.

As stakeholders await the results, the economic landscape remains poised for further developments, influenced by both local policy measures and global economic indicators.

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Investment

Nigeria Sees Record $3.38 Billion in Q1 Foreign Investments

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Nigeria attracted a record $3.38 billion in foreign investments during the first quarter of 2024, the highest quarterly inflow in four years.

This surge in investments is largely attributed to reforms implemented by the Central Bank of Nigeria (CBN), as revealed in the latest capital importation report by the National Bureau of Statistics (NBS).

The report highlighted a 210.2 percent increase in foreign investments from the $1.09 billion recorded in the previous quarter.

Year-on-year, foreign capital inflows rose by an impressive 198.1 percent from $1.13 billion in Q1 of 2023.

Analysts point to several key reforms by the CBN that have boosted investor confidence. These include the harmonization of the foreign exchange rate market, the clearance of forex backlogs, naira devaluation, and high interest rates aimed at curbing inflation.

These measures have collectively sent positive signals to investors, prompting a significant increase in capital inflows.

Portfolio investment was the largest contributor to the foreign investment surge, accounting for $2.08 billion, or 61.5 percent of the total.

Other investments followed, with $1.18 billion (34.9 percent), while foreign direct investment (FDI) lagged behind, contributing only $119.2 million (3.53 percent).

Money market instruments under portfolio investment saw a dramatic increase, surging by 592.7 percent to $1.61 billion in Q1 from $231.8 million in Q4. Compared to Q1 of the previous year, this represents an astonishing rise of 1,175.2 percent.

“On the money market front, open market operations (OMO) were the major contributors. Foreign investors were attracted to the over 25 percent yield for a carry trade in naira while managing the attendant FX risks,” explained Temitope Omosuyi, investment strategy manager at Afrinvest Limited.

The CBN is also expected to receive a $1 billion loan from Afrexim as part of a $3.3 billion inflow from a commodity swap deal.

This anticipated inflow further shows the growing confidence in Nigeria’s economic prospects.

Foreign inflows into stocks jumped fivefold in the first three months of the year to N93.37 billion from N18.12 billion in the same period last year, the highest in any three-month period since 2019.

“The CBN’s reforms have transformed Nigeria from being uninvestable a year ago to an attractive investment destination today,” commented a foreign portfolio manager who preferred to remain anonymous. “The settlement of the FX backlog, shift to a more market-determined exchange rate, and a more credible monetary policy are proving too hard to resist for investors.”

The NBS report also showed that the banking sector recorded the highest capital inflows with $2.07 billion, representing 61.2 percent of the total.

This was followed by the trading sector, valued at $494.9 million (14.7 percent), and the production/manufacturing sector, which attracted $191.9 million (5.68 percent).

Geographically, the capital importation report revealed that most of the investments originated from the United Kingdom, contributing $1.81 billion (53.5 percent).

The Republic of South Africa followed with $582.3 million (17.3 percent) and the Cayman Islands with $186.2 million (5.52 percent).

Lagos State emerged as the top destination for foreign capital, receiving $2.78 billion, or 82.4 percent of the total capital imported. It was followed by Abuja (FCT) with $593.6 million (17.6 percent) and Ekiti with $0.01 million.

Stanbic IBTC Bank Plc received the highest capital importation into Nigeria with $1.26 billion (37.2 percent), followed by Citibank Nigeria Limited with $547.7 million (16.2 percent), and Rand Merchant Bank Plc with $528.7 million (15.7 percent).

Despite the positive outlook, experts caution against celebrating too early. Adeola Adenikinju, president of the Nigerian Economic Society, said, “While foreign portfolio investment (FPI) is on the rise, it is crucial to ensure these inflows translate into foreign direct investments (FDI) that generate employment and reduce poverty. FPI may not necessarily create the same long-term economic benefits.”

President Bola Tinubu, who assumed office in May 2023, has taken significant steps to attract foreign investment, including the removal of petrol subsidies and partial foreign exchange reforms.

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Treasury Bills

CBN Treasury Bills Auction Oversubscribed by 338%, Raises N284.26bn

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FG Borrows

The Central Bank of Nigeria (CBN) has successfully raised a total of N284.26 billion through its latest Nigerian Treasury Bills (T-Bills) auction.

The auction, which was initially set to offer N228.72 billion, saw an overwhelming subscription of N773.98 billion, indicating an oversubscription rate of 338%.

This substantial interest highlights the ongoing demand for government securities amid Nigeria’s economic conditions, providing a crucial source of funding for the government’s short-term expenditure.

According to the auction results released by the Debt Management Office (DMO) and confirmed by data on the CBN website, the strong investor turnout underscores the perceived safety and attractiveness of T-Bills as an investment option.

Surge in Treasury Bill Debt

The successful auction comes at a time when Nigeria’s T-Bills debts have soared to unprecedented levels.

Between December 2023 and March 2024, the debt rose sharply from N6.5 trillion to N10.4 trillion, marking a 60% increase in just three months.

This rise reflects the government’s heavy reliance on T-Bills to finance short-term fiscal needs amid ongoing economic challenges.

Breakdown of the Auction

The auction featured three tenors: 91-day, 182-day, and 364-day bills. Each tenor saw significant investor interest, with the 364-day bills attracting the highest subscriptions:

  • 91-day bills: Offered at N29.83 billion, received subscriptions worth N36.29 billion, with an allotment of N28.15 billion. The stop rate was 16.30%.
  • 182-day bills: Offered at N30.67 billion, received subscriptions of N40.58 billion, with an allotment of N36.44 billion. The stop rate was 17.44%.
  • 364-day bills: Offered at N168.21 billion, received overwhelming subscriptions of N697.11 billion, with an allotment of N219.67 billion. The stop rate was 20.68%.

Investor Confidence and Government Strategy

The significant oversubscription across all tenors highlights strong investor confidence in Nigerian T-Bills as a secure investment avenue, even amidst prevailing economic uncertainties.

The high subscription rate, particularly for the 364-day bills, indicates a preference for longer-term securities, likely driven by expectations of future economic stability and favorable returns.

Government’s Debt Management

This auction underscores the critical role of T-Bills in the government’s debt management strategy.

Treasury bills and Federal Government of Nigeria (FGN) bonds are considered risk-free investments, providing a safe haven for investors while helping the government manage its debt profile and finance short-term expenditures.

Rising Domestic Debt

The surge in T-Bills debt has contributed to an increase in Nigeria’s total domestic debt profile, which rose to N65.6 trillion in Q1 2024, up from N59.1 trillion in December 2023.

While the external debt profile saw a slight dip from $42.9 billion to $42.1 billion, the overall public debt in naira terms stood at N114.7 trillion as of March 2024.

Economic Outlook

Despite the rising debt levels, experts highlight the importance of these instruments in managing liquidity and supporting government financing needs.

Treasury bills not only help in raising funds but also play a role in controlling the money supply, which is crucial for implementing effective monetary policy.

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