June 30, 2023/InvestmentOne Report
As we wind up the first half of the year and in line with our policy directive, we present to you our financial investment performance report, detailing the investment portfolios, summaries of portfolio investments, financial highlights; explanatory notes and projected investment performance for the second half of the year.
These financial highlights and insights are intended to keep you up-to-date on the performance of capital, fund risk/reward relationship vis-à-vis your financial needs, and allow you to take advantage of the yields in the capital market and potentially earn more by way of dividends reinvestment or capital injection.
Investment Performance Details
Below is a breakdown of performance by individual investments and asset classes. The explanatory notes will showcase the key drivers of portfolio performance and the effectiveness of our investment strategies.
FIXED INCOME
Interest rates for the first and second quarters of 2023 have largely been influenced by a set of factors. These factors include liquidity levels, fluctuating exchange rates and inconsistent monetary policies, causing rates to move in both directions. Also, the Treasury Bill has witnessed fluctuations in rates to 14.74% and 2.24% high and low respectively, at the primary and secondary markets. In the same vein, the Bond Market has traded on a mixed note as yields on most instruments have moved in different directions. These upward and downward movements of the rates/yields were orchestrated by many factors such as those mentioned above, and the floating of the Dollar by the CBN to achieve a unified exchange rate.
However, financial analysts believe there will be a marginal increase in rates following the government’s quest to borrow to finance the deficit in the 2023 budget amid revenue shortfalls. Additionally, the rising inflation occasioned by the removal of fuel subsidies will propel investors to demand more to bridge the negative margin on FI.
EQUITY MARKET
Equity investments in Nigeria performed relatively well in the first half of the year under review. For instance, in recent weeks, NGX-ASI went up by 18.96% YTD, to close at a 16-year high of 60,968.27pts. While market capitalization increased from 27.92 trillion at the end of 2022 to 32.79 trillion in 2023. These gains are attributable to various triggers like corporate actions, impressive earnings reports from some companies and dividend reinvestments. Again, industry players predict an increase in capital gains and shared dividends for the second half of the year.
INVESTMENT PERFORMANCE PROJECTIONS
For the second half of the year, our projection for the equity markets is tilted towards the upside, following the predicted growth by various financial managers, the floating of a unified exchange rate to remove liquidity constraints and restore foreign investors’ confidence, and the anticipated market-friendly policies by the government. With the new administration promising to implement a comprehensive reform package to revamp the economy, analysts are optimistic that those critical policies and the foreign exchange management reforms will address the policy issues in the financial services industry, boost investors’ confidence, and redirect FDI, which will in turn increase capital and dividends.
Disclaimer: Please note that this content is for informational purposes only and does not constitute a recommendation or endorsement from us to invest in any particular asset class.
