As global financial markets swing recklessly in the storm of COVID-19, it is easy to be confused when deciding what investment vehicle to jump on that would maximize one’s profits. Nairametrics interviewed some financial experts, entrepreneurs, and corporate heads and asked for their opinions on what sector they would invest in if they had, say, N5 million capital.
Their responses were as interesting as they were varied—ranging from buying stocks to investing in Eurobonds, cryptocurrencies, foreign currencies, and even angel investment.
Elile Olutimayin, ACS, Managing Director at CardinalStone Securities Limited
A lot needs to be considered when giving investment advice to a potential investor – age, risk tolerance, cash flow, cash obligations, duration, and details on the investor’s overall portfolio to ensure diversification.
With the price to earnings ratio of the Nigerian stock market currently around 7.2x, it is undervalued when compared to some emerging and frontier markets; a significant upside potential exists for our market post-COVID-19, and if key macro concerns are addressed.
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With N5million and a 12 to 18-month investment horizon, I would invest in some very decent names on the local bourse. My preferences in the banking sector are tier 1 names like FBNH, Zenith, Guaranty, and UBA. For the non-banks, Dangote Cement and MTNN are my top picks.
Olusayo Tola-Adenaike (ACA, ACMA, CGMA) Financial Business Partner, Oil Multinational Firm
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The treatment of N5m investment will vary from one individual to the other, depending on whether you have an Emergency Fund, and the current proportion of your portfolio.
On a personal note, additional N5m investment will be used for either of these options:
If I can get USD at close to the official rate, I will convert the entire sum and invest 50% into a Eurobond and 50% in my USD Mutual fund.
I would invest the entire N5m into a reliable and high-interest Agric crowdfunding arrangement.
I would invest N2.5m into my Naira Money market fund and will split N2.5m into 10 places to give short term interest yielding loans to family/friends who are providing services that are essential in this period (food, logistics, pharmacies, supermarkets, etc).
Yele Bademosi CEO & Co-founder of Bundle
Bitcoin, for the last 10 years, has been the best performing asset of any asset type/class so I’m a long term holder.
BNB is the network token for Binance Chain and is one of the few crypto assets I’m a long term holder in. It fits into an investment thesis I’m developing for platform/network tokens for both crypto assets. I believe there’s a greater than 50% chance that both will return at least 25% from their current price at some point over the next 12 months (probably higher).
In addition, Eurobond is a dollar-based investment so it’s a good hedge against any potential devaluation with decent annual returns.
For Tech Stock ETFs, I’m very long on tech; they are one of the few sectors that can potentially thrive even in a downturn and have the flexibility to manoeuvre headwinds.
Samed Olukoya Founder & Chief Executive Officer at Investors King
The recent currency devaluation has increased Nigeria’s foreign exchange rate, cost of importation, and cost of doing business in general, while high unemployment, weak earnings, and low household incomes have impacted consumer spending.
Therefore, the risk associated with the real economy at this time has risen and definitely requires more money to mitigate.
I will invest in the foreign exchange market where demands and supplies are readily available given my background and experience.
Silas Ozoya, Managing Partner, SUBA Capital
With an N5 million fund, I would first analyze the risk involved in whatever investment vehicle portfolio I intend to invest it in, consider the rate of return on investment via the tenor of the investment, and frequency of return before taking such a decision.
My top investment portfolios of choice would be agriculture, real estate, and the capital market to fulfil long, medium, and short term tenors.
I would invest 60% of the fund in Agriculture to produce more food and create jobs, 20% in rental real estate, and 20% in the Capital Market for liquid cash flow.