Chinwendu Obienyi
With economic shocks ravaging the global investment climate especially in Nigeria, Meristem Securities, a capital market conglomerate, has said pockets of strategic opportunities still exist for investors especially in the fixed income securities segment.
The firm in a statement sent to Daily Sun, noted that the novel coronavirus (COVID-19) pandemic has caused slowdown in economic activities as a result of strict guidelines of social distancing and in some cases partial and complete lockdown of some states in the federation.
According to the firm, these guidelines have further compounded preexisting growth challenges in the domestic front like the crash in oil prices, which contributes a significant amount to government revenues and the nation’s foreign exchange reserves, leading to uncertainties.
But the Managing Director, Meristem Wealth Management, Sulaiman Adedokun, explained that with the overall outlook for the financial market clouded with uncertainties at this moment, fixed income securities will provide safer investment opportunities for investors given the volatility that exists in the equities space.
Commenting across the various sectors of the economy, Adedokun said,the banking sector has been more resilient than previous years and added that the consumer goods industry is going to be guided by demand for essential items during this time.
According to him, “the recapitalization of the insurance industry is expected to continue amid the current crisis and we see growth in the telecommunications sector due to demand for voice and data services as most businesses now work remotely”.
Corroborating him, Head Wealth Management at Meristem, Damilola Hassan, said that with the accompanying risk of capital loss associated with investments particularly at this period, investors can diversify and broaden their portfolio exposure in the recently launched Meristem Value and Growth Exchange Traded Fund.
The recently launched Meristem Exchange Traded Funds offer hassle-free and cost-effective investment option to investors and with a minimum of N10,000. Investors can have access to a wide range of stocks across different sectors including banking, industrial goods, conglomerate, agricultural sectors and a host of others that meet their investment style criteria while the Exchange traded fund typically mirror the performance of the index it tracks
“We expect the downward review of Nigeria’s sovereign rating outlook by global rating agencies and the elevated risk environment to lead to an upward repricing of yields in the fixed income space. We also recommend investments in dollar-denominated fixed income instruments as a means of hedging against foreign exchange risks” Damilola added.