Nigeria missing in global investment destinations
Against the backdrop of Nigerian equities market’s bearishness, which experts blamed on the sliding value of the Naira against the dollar, which made foreign portfolio investors to dump their shares, a notable international investment advisory agency – The Credit Suisse – in its Investment Solutions & Products (IS&P) team’s report, published in late last year, on opportunities to invest in select emerging markets in 2016, had excluded Nigeria and other African countries but points to stock markets that are in Asian countries where inflation is low, currencies are stable and countries import more commodities than they export – specifically, India, South Korea, and Taiwan.
The report describes India’s economy as large and domestically oriented, offering a buffer in the event of a further slowdown in China or weaker-than-expected growth in the developed world.
“Indian’s GDP expects to expand by 7.3 per cent in 2016, up from 6.9 per cent in 2015,” the report reveals.
South Korea and Taiwan, according to the report, are expected to be relatively immune to the deleterious effects of any further U.S. dollar appreciation in 2016.
Specifically, South Korea, the report further reveals, is emerging world’s largest net commodity importer and Taiwan, the largest current account surplus in the emerging world, followed by South Korea. Both countries have low levels of debt. A positive for Korean equities investors.
For its part, Taiwan’s trailing 12-month dividend yield of 4.2 per cent is also the highest in emerging Asia and 47 per cent higher than emerging markets as a whole.
On fixed income securities, the report points to pockets of opportunities in Russian, Mexican, and Peruvian bonds that make them worth a look, even as Russian bonds may achieve higher returns than any other emerging market country at 18.1 per cent, thanks to improving growth (0.5 per cent compared to a 3.5 per cent contraction in 2015) and lower inflation (7.5 per cent compared to 15.4 per cent in 2015).
Though Latin American countries such as Brazil and Colombia are described as vulnerable to capital outflows when and if rates rise in the United States, the report still identifies bright spots in Mexican and Peruvian bonds that are trading at attractive valuations, and refers to both economies as a relatively solid footing, with Peru’s fixed-income assets expected to earn the second-highest returns of any emerging market debt in the coming year – 13.3 per cent in dollar terms.
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