Robert Marshall Lee , the fund manager for Dreyfus Emerging markets Fund in a Bloomberg interview stated why Nigeria is in his sights.
“We’ve been waiting to invest in Nigeria for the last four or five years, just being patient for the economy and the currency to shake out. We think the opportunity is there.”
Key risk to watch out for
Despite his optimism, Marshall-Lee was cautious about Nigeria’s dependence on crude oil to run the economy.
“The oil market disruption risk is huge over the next 10 to 15 years. That’s a big risk to the Middle East particularly. Even somewhere like Nigeria. Nigeria is a petro-economy.
Why Dreyfus is not late
The Nigerian Stock Exchange (NSE) All Share Index is at all time high of over 39,000 points. Year to date, the index has returned over 40%. This simply means that on average, stocks on the NSE are up by 40%. Several stocks have appreciated much higher at over 100%.
Activities at the NSE are largely driven by foreign investors, who have entered the market in droves due to the improvement in macroeconomic indices. Macroeconomic indices include Gross Domestic Porudcct (GDP) which is the vlaue of goods and services produced in a country. Nigeria’s GDP has bounced back from a recession.
The National Bureau of Statistics (NBS) Q3 capital importation report showed $4.1 billion was imported into the country, with $2.1 billion going into portfolio investments.
Impending elections however, mean foreign portfolio investors will start to unwind their positions on the NSE in late 2018 and renter after the elections. This would lead to a drop in share prices.
Dreyfus, established in 1951 and headquartered in New York City, is an American investment manager of investment products and strategies. The company merged with Mellon Financial in 1994, and then became a subsidiary of Bank of New York Mellon when Mellon Financial and The Bank of New York merged in 2007.