The Financial Derivatives Company (FDC) has revealed that the Nigerian equities market was the best financial instrument to hedge against inflation from the periods of August 2020 to August 2021.
The FDC disclosed this in its inflation vs investment return data released for August, on Sunday, in Lagos, according to the News Agency of Nigeria.
The data tracks 4 main asset classes, with equities coming out as the best hedging tool against year on year inflation growth, with a return of 54.85% on inflation of 17.38%, stating that Nigerian equity investors’ return beat inflation by 37.47%.
What the FDC said
Among the four asset classes tracked by the FDC, the Nigerian equity emerged the best hedge against inflation on a year-on-year (y-o-y) basis.
According to it, the Nigerian equity investors’ return beats inflation by 37.47 per cent.
It stated, “Recall that the Nigerian equity market was named the best-performing stock market in 2020, with over 50 per cent gain, according to a report by Bloomberg.
“With earnings season now upon us, investors have begun to enjoy returns beyond capital gains, by way of dividend payments which some companies have already announced.
“Capital market players also continue to look forward to the Exchange’s activities with regards to galvanising participation through its innovative products and services, strong investments in technology and information dissemination.”
What you should know
Nigeria’s inflation rate for the month of July 2021, dropped further to 17.38% compared to 17.75% recorded in June 2021. Food inflation, which is a closely watched index, declined to 21.03% compared to 21.83% recorded in the previous month.
Nigerian Stocks ended the last trading session of year 2020 with Year-to-Date (YTD) at +50%.