Nigeria’s economy is expected to grow 1.5 percent in 2021 and 2.9 percent in 2022, according to data retrieved from the African Development Bank. This is due to a recovery in prices and production of crude oil.
By reopening borders, inputs will become more accessible, which should ease pressure on domestic prices and inflation. In addition to the devaluation of the naira, discounted stock prices (all likely to be temporary), many Nigerian companies and assets appear to be quite undervalued, at least compared to their African contemporaries.
Thus, selected experts provided Nairametrics with their perspective on financial assets with good fundamentals for 2022.
Oluwaseun Agbejimi, AVP / COO, TradeFi at Comercio Partners Asset Management
Next year will provide good entry points for local and foreign investors, as many investment vehicles in our universe are currently undervalued.
Among local stocks, he will most likely favor Zenith Bank and MTNN, among others. Zenith Bank due to its strong fundamentals and consistent dividend payout and high dividend yield which remain very attractive to investors. While for MTNN, the outlook for revenue and profit growth remains positive even without a payment services bank (PSB) license.
For the fixed income space, we expect yields (yields) to be more attractive given the planned borrowing of N6 trillion to finance the 2022 budget coupled with an unorthodox constant flow of the government. cash reserve ratio (CRR) by the umbrella bank.
On the foreign side, the tapering coupled with the reversal of the dovish global position should further weaken market sentiment, creating a good opportunity for SSA Eurobond. We expect double-digit yields for Eurobonds from Nigeria, Ghana and Angola. A double digit return on a dollar investment is definitely a good deal.
Investors’ risk appetite is also a determining factor, as some players prioritize the safety of their investments over returns. As we all know, the higher the risk, the higher the returns. If your risk appetite is medium to low, the fixed income market might be seen as a good option for you, while big lions and risk takers can gamble in the space of stocks and the like.
However, federal government securities are viewed as safe-haven investment options for risk-averse investors.
Thelma Ugonna Ohiri-Anyanwu, CFA Management Associate at First Bank of Nigeria
The world has experienced 3 waves of the Covid-19 virus and the impact on global economies cannot be overstated. With the possibility of a 4th wave, if changes continue, increases in commodity prices and strong inflationary pressures, 2022 will be the year of transition from recovery to resilience.
In 2022, I will seek investments that would provide positive real income, provide stability, increase my funds, and add value; therefore, I am looking to invest in direct agriculture, digital currency, dollar / eurobond funds, value stocks and explore real estate investments by investing in shorts and leasing opportunities. Above all, I plan to invest myself by acquiring identified skills.
Victor Ofili, Head of Research at Cowry Asset Management Limited
As part of the equity market investment strategy for the year 2022, Cowry Research expects investors to follow and position themselves in companies that have recently recovered from a low income stream of base and have also increased their profitability, especially in 9M 2021.
We note that the stock prices of this set of companies would become more attractive in the first quarter of 2022, as they are likely to offer an increased dividend distribution to those who invest in them. This strategy should quickly reward investors as soon as possible between December 2021 and March 2022.
Additionally, we expect mid to long term investors to look for undervalued stocks; especially companies whose share price is trading below their book value per share and which have experienced higher profitability with a declining leverage ratio. Additionally, this set of investors should invest their money in dividend paying stocks, especially those with a dividend yield above 10%, and are likely to increase their dividend payout.
Specifically, long-term investors should aim for the second quarter of 2022 to buy the expected decline – this would allow them to position themselves at a comfortable support price level that comes with a higher dividend yield.
In order to maximize returns on investment, we believe investor attention should focus more on the sectors we have highlighted above as they are well positioned for higher income and profitability in 2022.
Mosope Arubayi, SSA Economist (West and South Africa) and Market Strategist at IC Group
The first order of business in 2022 is to protect your portfolio from inflation, if you haven’t already, as inflation is expected to stay above recent historical norms. At times like this, commodities are an effective hedge.
Therefore, investors may want to reduce their traditional allocations to fixed income securities and increase their exposure to real assets. Oil and gold will be key markets to watch. With their growth potential, stocks are a decent long-term shield against eroding inflation, especially if you focus on companies with pricing power.
I expect interest rates to rise slightly in 2022 from current lows. Rising rates can lead to low or potentially negative returns for fixed income securities, which also leads me to favor stocks over bonds.
I see opportunities in dollar denominated assets versus those denominated in local emerging market currencies. Emerging markets appear poised for growth, but old challenges remain, while new ones have emerged. Therefore, it is too early to be fully bullish in emerging markets as headwinds over energy prices, regulation and COVID persist. Emerging market local debt may look appealing at this point, but with a little patience you can get better entry points next year – with the US Fed lowering further, rates hike anticipated. long-term global interest rates and the accompanying support of a stronger dollar. this is negative for returns on emerging market assets. So be modest in your expectations for emerging markets performance for 2022.
Another unstoppable trend – a carryover from 2021 – is investment in FinTech. During the pandemic, banking customers were pressured to transact online or through mobile devices. But even before the pandemic, a predominantly younger generation of consumers relied on mobile devices to pay for goods and services, transfer money, and trade stocks and cryptocurrencies. This trend is expected to continue in 2022.
Adaobi (Eziokwu) Okonkwo, Senior Associate Treasurer
Reeling from the pandemic, 2021 saw many economies grapple with high levels of inflation. Nigeria is not to be outdone, the naira (official rate) depreciating by more than 3% (Dec 2020; 400.13, Dec 2021: 414.13) (FMDQ) while the parallel market has depreciated by more than 20% in the last 12 months (Dec 2020; 470, Dec 2021; 560).
It is safe to say that any investment made in Naira over the past year would have to earn more than the rate of inflation (15.4%, CBN) for one to be profitable.
The uncertainty as we end 2021, with the new COVID strain Omicron could mean turbulent economic activity globally. For Nigerians, investing in dollar-denominated assets ensures that their investment does not make them worse.
This can range from a dollar deposit account (making at least 5% per annum) for the most risk averse investors, to investing in the equity market and crypto market for the riskier investors. .
Best Choices for Investing in the US Stock Market; Telecommunications (eg Twilio), Fintech companies (So-Fi Technologies, Upstart) and the most popular like Apple, Amazon, Netflix.
The key to staying secure and profitable is a diversified portfolio. Invest a decent proportion of your income locally in liquid investments (treasury bills, commercial papers, money market funds) because money is king, especially in an uncertain economy.
Despite its relatively strong position compared to other tech companies, Meta continues to grow at a remarkable rate. In its last earnings reminder in September this year, the company reported earnings of $ 29 billion for the quarter, a 35% increase year-over-year.
Nathaniel Saleh Structured Finance Analyst at Link Group
For my investment choice through 2022, I’ve decided to focus on some of my overlooked Q3 2021 choices with PubMatic and Meta in mind.
PubMatic ($ PBM)
PubMatic is an advertising company that connects publishers with advertisers to enable them to find the space needed to market their products, with publishers earning revenue by marketing these products through the respective platforms.
Yahoo Finance calls the stock undervalued, trading at $ 37.69 per share, PubMatic specifically reported 54% year-over-year revenue growth, 117% net income growth, and a Year-over-year adjusted EBITDA growth of 81% and saw a total of over 60,000 advertisers placing ads on the platform.
I think this company has already demonstrated strength and competitive advantage within a year of going public. This should be a business that you keep on your watch list.
The second stock on my list is Meta ($ FB)
Meta formerly known as Facebook Inc is an American conglomerate primarily known for its social media platform Facebook which is also the parent company of Instagram and WhatsApp. So right now a meta share is running at $ 333.12 with a 52 week low of $ 244.61 and a 52 week high of $ 384.33, the company has seen substantial growth over the past year. year, starting at around $ 275 a year ago, gradually rising to over $ 375.
The average analyst price target is $ 401.93, about 20% above the current price of $ 333.12.
Despite the difficulty in identifying trends, in Africa’s largest economy, Nigeria, dollar-denominated assets appear to be a viable investment destination and the time to act is now.