Economy
Survey Shows Key Investment Decisions of African Fund Managers
By Modupe Gbadeyanka
A survey of 50 African asset managers for the African Exchanges Linkage Project (AELP) project has revealed the key factors fund managers consider when they choose new markets.
According to the report, some of the critical decisions made before investing in other African markets include governance, good regulation and availability of market data and prices.
From the questionnaires sent out to the selected fund managers, 91 per cent said the consider market regulation, followed by investor regulation and availability of market data and prices (90 per cent each).
Other top criteria that help fund managers choose where to invest are levels of dealing price, efficiency of execution and commission (86 per cent), the quality of companies and investment opportunities (also 86 per cent), corporate, social and governance criteria (84 per cent) and availability of research (80 per cent).
It was observed that three quarters of investors said they were reluctant to invest in small and illiquid markets or where valuations are excessive.
Only half decide to invest in a company based on its dividend policy, while valuation and governance are the top factors.
Asset managers in Nigeria and the francophone West African countries are the most optimistic about prospects for Africa’s economies.
In the AELP poll, some 97 per cent of the surveyed Nigerian asset managers are optimistic about the continent, with average assets of $364 million under management, followed by 85 per cent of surveyed francophone asset managers, who averaged $416 million of assets managed.
Average across all the survey respondents, including a couple of South African managers, was $4.1 billion in assets under management.
Optimism is also strong among asset managers surveyed in Mauritius (80 per cent optimistic), Morocco (73 per cent), Nairobi and Egypt (each with 65 per cent of responses optimistic).
Nearly half (46 per cent) of respondents manage assets with investment horizons over five years, another 23 per cent for three to five years.
“The results of this survey confirm the high level of professionalism of African fund managers using world-class standards and criteria in their decision-making. This is really reassuring for the success of the AELP initiative,” the president of ASEA, Dr Edoh Kossi Amenounvé, stated.
The poll evaluates the appeal of different investment markets in the AELP, which brings together seven leading African securities exchanges to boost trading, investment and information links.
AELP is procuring a technology platform to link stockbrokers, so that a broker on one exchange can send investors’ orders to an executing broker on another exchange for execution.
The AELP is a joint initiative by the African Securities Exchanges Association (ASEA) and the African Development Bank to unlock Pan-African investment flows, promote innovations that support diversification for investors, and address depth and liquidity in the markets. It is funded by the Korea-Africa Economic Cooperation (KOAFEC) Trust Fund through the African Development Bank.
The AELP exchanges are Bourse Régionale des Valeurs Mobilières (BRVM, integrating eight West African countries), Casablanca Stock Exchange, The Egyptian Exchange, Johannesburg Stock Exchange, Nairobi Securities Exchange, The Nigerian Stock Exchange and Stock Exchange of Mauritius.
Cross-border trading between the seven markets totalled $1.1 billion in 2019, and was at over $500 million in the first quarter of 2020, according to the participating markets.
The “African Listed Securities” assets across these exchanges offers equities investments in more than 1,050 companies, including Africa’s most promising, profitable companies and global leaders. Investors will also buy or sell bonds, exchange-traded funds (ETFs) and derivatives if they are listed on the participating Exchanges.
ASEA supports African economic integration and the African Continental Free Trade Area. The AELP will promote free movement of capital and investment.
By Adedapo Adesanya
The duo of Geo-Fluids Plc and Afriland Properties Plc propelled the NASD Over-the-Counter (OTC) Securities Exchange up 0.13 per cent on Friday, January 10.
Investors gained N1.4 billion during the trading session after the market capitalisation of the bourse ended at N1.053 trillion compared with the previous day’s N1.052 trillion, and the NASD Unlisted Security Index (NSI) increased at the close of business by 4.07 points to wrap the session at 3,073.93 points compared with 3,069.86 points recorded at the previous session.
Geo-Fluids added 25 Kobo to its value to close at N4.85 per unit compared with the previous session’s N4.60 per unit, and Afriland Properties Plc gained 24 Kobo to close at N16.25 per share versus Thursday’s closing price of N16.01 per share.
There was a 35.4 per cent fall in the volume of securities traded in the session as investors exchanged 4.3 million units compared to 6.6 million units traded in the preceding session, the value of shares traded yesterday went down by 37.4 per cent to N17.2 million from the N27.5 million recorded a day earlier, and the number of deals decreased by 47.2 per cent to 19 deals from the 36 deals recorded in the preceding day.
FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and Industrial and General Insurance (IGI )Plc with 10.7 million units sold for N2.1 million.
IGI Plc closed the day as the most active stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira witnessed a depreciation on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Friday, January 10.
According to data from the FMDQ Exchange, the local currency weakened against the greenback yesterday by 0.12 per cent or N1.80 to sell for N1,543.03/$1 compared with the preceding day’s N1,541.23/$1.
The pressure on the domestic currency came as the access granted to the Bureaux de Change (BDC) operators by the Central Bank of Nigeria (CBN) to purchase FX from the official market through the Electronic Foreign Exchange Matching System (EFEMS) platform prepares to end next week, precisely on January 19.
The CBN had given a 42-day window to the operators to access the platform to help stabilise the Naira in December, and this expires next week.
On Friday, the Nigerian currency tumbled against the Pound Sterling in the official market by N30.78 to sell for N1,889.29/£1 compared with the previous day’s N1,858.51/£1, but gained N5.48 against the Euro to finish at N1,583.81/€1, in contrast to Thursday’s rate of N1,589.29/€1.
As for the parallel market, the Nigerian Naira remained stable against the US Dollar during the trading session at N1,650/$1, according to data obtained by Business Post.
In the cryptocurrency market, it was bearish as the US economy added 256,000 jobs last month, the Bureau of Labor Statistics reported on Friday, topping forecasts for 160,000 and up from 212,000 in November (revised from an originally reported 227,000).
However, the readings came after a number of recent economic reports triggered a broad-market pullback across asset classes such as crypto as investors quickly scaled back the idea of a continued series of Federal Reserve rate cuts in 2025.
Cardano (ADA) fell by 3.6 per cent to trade at $0.921, Solana (SOL) slumped by 2.8 per cent to $185.93, Ethereum (ETH) depreciated by 1.4 per cent to $3,233.27, Litecoin (LTC) lost 1.3 per cent to finish at $103.62, Dogecoin (DOGE) shed 0.5 per cent to sell at $0.3315, Bitcoin (BTC), waned by 0.2 per cent to $94,154.43, and Binance Coin (BNB) went south by 0.1 per cent to $693.30.
On the flip side, Ripple (XRP) jumped by 1.5 per cent to settle at $2.34, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) sold flat at $1.00 each.
By Dipo Olowookere
Profit-takers took control of Customs Street on Friday, plunging it by 0.08 per cent at the close of trading activities.
The sell-offs were across all the key sectors of the Nigerian Exchange (NGX) Limited on last trading session of the week.
The insurance space went down by 1.53 per cent, the banking index depreciated by 0.41 per cent, the consumer goods sector weakened by 0.16 per cent, and the energy counter slumped by 0.08 per cent, while the industrial goods sector closed flat.
At the close of business, the All-Share Index (ASI) tumbled by 79.68 points to 105,451.06 points from 105,530.74 points and the market capitalisation retreated by N48 billion to N64.303 trillion from N64.351 trillion.
Yesterday, investors traded 1.5 billion shares worth N19.4 billion in 12,877 deals compared with the 489.5 million shares worth N13.1 billion transacted in 13,010 deals in the preceding day, indicating a decline in the number of deals by 1.02 deals and a rise in the trading volume and value by 203.14 per cent and 48.09 per cent, respectively.
Wema Bank was the busiest stock with 976.2 million units valued at N9.8 billion, Tantalizers traded 53.0 million units worth 129.6 million, Universal Insurance sold 34.8 million units for N26.8 million, Access Holdings exchanged 33.9 million units valued at N843.8 million, and Nigerian Breweries traded 27.3 million units worth N873.3 million.
The heaviest loss was suffered by Sunu Assurances with a decline of 9.99 per cent to trade at N7.30, Eunisell shed 9.96 per cent to N17.35, SAHCO crumbled by 9.87 per cent to N30.15, DAAR Communications plunged by 9.28 per cent to 88 Kobo, and Sovereign Trust Insurance went down by 7.04 per cent to N1.32.
On the flip side, C&I Leasing gained 10.00 per cent to close at N4.51, Honeywell Flour appreciated by 9.99 per cent to N10.02, Trans Nationwide Express jumped by 9.89 per cent to N2.00, RT Briscoe rose by 9.83 per cent to N2.57, and Secure Electronic Technology grew by 9.46 per cent to 81 Kobo.
Business Post reports that the bourse ended with 33 price gainers and 25 price losers, indicating a positive market breadth index and strong investor sentiment.
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