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Afrinvest canvasses diverse investment strategies in face of economic headwind


Afrinvest is canvassing diverse investment strategies in playing the equities and fixed income markets in 2015 given the glob- al, political and economic uncertainties surrounding investment fundamentals for the year. In its 2014 review and 2015 outlook tagged ‘Staying Afloat in Stormy Waters’, Afrinvest said yields on fixed income instruments are expected to stay high (14.5%-15.5%) in 2015 as investors are likely to demand for higher premiums to compensate for credit, foreign exchange, interest rate and country risks. “We support optimal strategies for equities and fixed income amidst the market turbulence while setting an eye on alpha”, Afrinvest analysts said. The firm’s outlook for the Nigerian equity market is modest for 2015. “Having lost 16.1% in 2014, recovery is in sight given our base case return expectation of 5.3% as companies’ fundamentals remain sound and attractive. The banking and industrial sectors will still lead the crusade of gains due to high losses suffered in 2014.” Afrinvest believes Nigeria’s economic growth engine will decelerate slightly in 2015 to 5.0%GDP growth while inflation inches higher up to an average of 9.5% on the back of higher exchange rates. Responding to question at the media presentation of the report, Ike Chioke, managing director, said, “What need to be done is redesigning the economy and creating an enabling environment for Nigeria to attract millions of dollars of investment. In creating an enabling environment, we will have to sacrifice today in order to invest for tomorrow”. Making a presentation on the 2015 projections, Ayodeji Ebo, head, investment research, said the firm expects increased domestic government borrowings in 2015 (approximately N2.0 trillion) against the backdrop of a significant drop in revenue (oil & non-oil) as well as anticipated reduction in capital expenditure.