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What Warren Buffet will do if he traded Nigerian stocks

Warren Buffett bought $5 billion investment in the Bank of America which expanded to $12 billion in 2017, gaining a whopping $7 billion.

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In 2011, Warren Buffett invested $5 billion in the Bank of America. On October 9, Bank of America CEO, Brian Moynihan was discussing this investment on the David Rubenstein Show. In 2011, Bank of America’s financial health deteriorated after the global financial crisis.

However, Buffett bought preferred stock in the bank. In 2017, that $5 billion investment expanded to $12 billion, gaining a whopping $7 billion.

A similar situation that happened in America about a decade ago is taking it to shape in the Nigerian Stock Exchange as the dividend yield on the Nigerian equities market has in recent times continued to increase as a result of the persistent free-fall in equity prices owing to a bouquet of factors.

The global Coronavirus pandemic has further strengthened the panic selloffs in the local and foreign financial markets.

[READ MORE: Here’s what Warren Buffet thinks parents should teach their kids about money)

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The impact of the virus seems heavy, killing more stock markets and economy than people across the globe, sending panic waves around the world, more devastating than the financial meltdown of 2008.

Nigeria @59: Rise, fall & rise of Nigerian stock market 

Nigerian stocks hit new lows as the Nigerian ASI Index hit a new 11-year low on a huge traded volume that suggests that investors are dumping their shares, in their desperate bid to cut their losses.

So far, the Nigerian market has lost all of 13% in just four trading sessions of the week, just as over N1.82 trillion has been shaved off the market capitalization within the same period.

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Meanwhile, with the resultant fall in the price of crude oil at the international market, the Nigerian economy is already challenging Nigeria on fiscal balancing and its recent devaluation of the naira

 The Central Bank of Nigeria’s efforts to spur economic growth and development through the low-interest rate regime, a situation that is first in the history of Nigeria, even as the lack of investor protection and corporate governance are hurting the market.

READ MORE: Another crushing recession ‘is coming’

The prolonged market downturn has, however, boosted yield, especially of blue-chip stocks and other dividend-paying equities across the different sectors of the market. Banking and other financial services stocks are powerhouses of any economy, just as they are intermediaries and agents of development.

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Dividend investing has become necessary in the post-general election Nigerian stock market.

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That has been characterized by a free-fall in equity prices, which has eroded investors’ capital and confidence in the entire economy due to weak macro-economic indices and a lack of development and growth-stimulating policies from the government to offer the much-needed direction.

The Dividend Yield at any time measures how much cash flow you as an investor are getting for every Naira invested in a company’s equity. It also tells what percentage of net profit a company pays out in the form of dividends. This is one of the main factors you need to consider when investing in dividend-paying stocks.

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It’s expected that there will be a slowdown on the losing momentum as low prices of stocks and high dividend yields attract buying interest that cannot be resisted by smart money, as more audited corporate earnings hit the market, going forward.

[READ ALSO: Why Warren Buffet’s $4.6m lunch with Bitcoin entrepreneur is experiencing delay)

This is despite the likely continuation of the mixed intraday movement in the midst of selloffs, with investors buying increasing positions in undervalued stocks ahead of dividend declaration.

This is also against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation and unstable economic outlook for 2020.

Nigeria top tier one banks like ZENITH, GUARANTY, UBA, FBNH, ACCESS look attractive based on their recent Price book ratio and dividend yield.

However, it’s very important to seek a certified financial advisor or licensed stockbroker, when picking stocks for investments, as unprofessional advice can erode your capital or savings.

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Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment trading. Follow Olumide on Twitter @tokunboadesina or email [email protected] He is a Member of the Chartered Financial Analyst Society.

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COVID-19: FG to launch Rapid Response Register for urban poor

The FG has moved to inaugurate an emergency intervention database for the poor residing in urban centres and affected by the pandemic.

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Nigeria blows past 40,000 COVID-19 cases

The Federal Government has announced that it would inaugurate a COVID-19 Rapid Response Register (RRR), which would be a health emergency response for the poor living in urban centers that have been affected by the pandemic.

This was disclosed by Mr. Joe Abuku, Communications Manager, National Social Safety Nets Coordinating Office (NASSCO), on Sunday in Abuja.

Mr. Abuku said the register would identify Nigerians that have been made poorer due to the pandemic, targeting mainly Traders and SME Owners.

He added that the scheme was designed by the Ministry of Humanitarian Affairs, Disaster Management, and Social Development, through NASSCO, in partnership with the World Bank, and will be inaugurated by Vice President Yemi Osinbajo, on Tuesday, at Transcorp Hilton, Abuja.

What Joe Abuku is saying

  • “This register is being built by NASSCO as an expansion of the existing National Social Safety Nets Project (NASSP). It targets small business owners, street vendors, petty traders, Small and Medium Enterprises (SMEs), and service providers.
  • “Others are low wage employed individuals and families, including daily wage-based laborers, urban poor and destitute (persons with disabilities), and vulnerable families in slum areas, affected by the pandemic.
  • “The category of Nigerians who will be in this register is typically the urban/semi-urban poor engaged in the informal sectors of the economy, who lost their source of livelihood due to the impact of COVID-19 on businesses and jobs. The Federal Government plans to extend cash transfers to households in this register for a period of 12 months.”

He also stated that NASSCO would use geographical satellite sensing to locale the wards where the urban poor live, as the targeting of the poor would be done via cell phone Short Messaging Service (SMS) technology that allows residents of targeted communities register to be assisted by following simple steps using USSD codes.

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The SMS approach would be integrated through data gathered by the National Living Standard Survey Assessments and would be complemented by existing databases of Non-Governmental Organisations and local self-help-support groups.

  • “Mobile phone numbers of those deemed eligible for assistance will be linked to digitized bank accounts to receive cash support, under an expanded cash transfer program of the Federal Government. These cash payments are designed to boost consumption for these households, build their resilience, and in some cases, inject fresh capital into small businesses.”

What you should know

  • Nairametrics reported last year that the World Bank said the outbreak of the coronavirus pandemic could make an additional 5 million Nigerians poor.
  • The Poverty and Shared Prosperity Report 2020 by the World Bank Group indicate that between 88 million and 115 million people could fall back into extreme poverty as a result of the COVID-19 pandemic.
  • This is in addition to an increase between 23 million and 35 million in 2021, potentially bringing the total number of new people living in extreme poverty to between 110 million and 150 million.

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Covid-19: Nigeria needs serious controls not a second lockdown – House Committee on Education

A member of the lower legislative house has advised the government to focus on serious control measures to help prevent the spread of COVID-19.

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Professor Julius Ihonvbere, Chairman, House Committee on Basic Education & Services, said the Federal and States governments should not impose a lockdown, but rather focus on serious control measures to help prevent the spread of the coronavirus.

He disclosed this during an interview with Channels TV on Sunday evening.

  • “I do not think we need a national lockdown now, I think what we need now is the first instance is serious controls. Let me say that the Governor of Lagos is the ‘poster man’ for the fight against covid-19. If we see you outside without a mask, we will arrest you and charge you to court, that is the kind of courage we need.”

He cited serious controls like buying hand sanitizers and washing materials to schools and urban areas in Lagos as part of the controls that should be commended.

  • “The issue is not a lockdown. If you lock people down, and you are not doing the right thing inside the lockdown, the cases will still increase. They (masses) will break it and will challenge it as they did during the first lockdown. So, the real issue is to bring out the policies and implement them.
  • “The Federal Ministry as a supervisor, yes states have the autonomy, but we give the state’s money from UBEC every year, we give them billions, what are they doing with it?

He urged that the FG should investigate what States use their Universal Basic Education Funds for, as Nigeria is in a time for “retooling and repurpose” and UBEC funding should be utilized in the fight against Covid-19.

What you should know 

  • Nairametrics reported last week that the Federal Government said Nigeria is not contemplating another lockdown and urged Nigerians to ignore social media posts circulating the possibility of another lockdown.

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Covid-19: Ghana’s healthcare could be overwhelmed – President Akufo-Addo

Ghanaian President has warned that he might impose a partial lockdown as healthcare facilities are overwhelmed by growing cases of coronavirus.

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Africa: Ghanaian inflation rate drops for the 3rd straight month to 10.1%, Ghana’s cedi becomes investors’ best choice ahead Nigeria’s naira, Ghana restricts flights into country after detecting Coronavirus but Nigeria ignores measure

The Ghanaian Government has warned that Ghana’s second wave of the coronavirus pandemic is rising fast and could overwhelm its already extended Covid-19 treatment centres.

This was disclosed by President Nana Akufo-Addo on Sunday in a Reuters report.

The Ghanaian President warned that he might impose a partial lockdown in the coming weeks as cases might reach peak levels.

Active cases in Ghana climbed to 1,924 from about 900 since the 5th of January. He also confirmed that the new variant was present in the country, as cases were imported from people entering Ghana.

The President said,

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  • “Our COVID-19 treatment centres have gone from having zero patients to now being full because of the upsurge in infections. At this current rate, our healthcare infrastructure will be overwhelmed.
  • “Work is ongoing to determine the presence and extent of spread of the new variants in the general population.”

What you should know

  • Nairametrics reported that the Federal Government also alerted Nigerians that hospitals across the country were running out of facilities to handle more serious cases of coronavirus infections, as the virus is spreading fast with mild symptoms in some victims and severe illnesses and death in others.

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