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Play it safe with shares and properties investments

Tunji Awonusi

By Tunji Awonusi   (Marketplace)

 

Some pretend to be rich, yet have nothing; others pretend to be poor, yet have great wealth. (Proverb 13.7)

When my editor in her usual way sent me an email to remind me about my February column, I was not sure what she wanted but I suspected she was going to ask me to do something about opportunities in 2018 for our loyal subscribers and readers.

I have known her enough to just write anything and send, because she is very ruthless when it comes to sending articles that do not cut it with her back to you with a one liner… This does not meet the standard of ‘The Interview'. I asked and guess what she said, "Since the year is still quite young, I don't think it would hurt looking at its prospects and one or two investment ideas for individuals."

Let me start by saying that there is no investment in the world that is foolproof and investment go up and down just like it happened to the American and European stock markets in the week ending 11th February, when the Dow Jones industrial average suffered its most significant single-day points loss in its 122-year history on Monday 6th February, plunging more than 1,100 points from where it ended the day the Friday prior. Just a day later, it closed up more than 560 points before declining slightly on Wednesday and dropping off again on Thursday.

Given how high the Dow had climbed in recent months, though, Monday's losses only amounted to about 4.6 percent of the index's total value. That's considerable but not cataclysmic, and its movements later in the week were significantly more muted.More alarming, however, was the fact that the Dow's roller coaster ride at times saw it gain or lose hundreds of points within a matter of minutes. The story was much the same for the S&P 500 and NASDAQ composite index, making it difficult to look away without missing a significant swing.

The Nigeria stock market has also done very well in the last few weeks and the index has soared greatly on the back of new foreign investment coming into the market which has seen stocks like GTB, Zenith, Stanbic IBTC, Lever Brothers, Nigeria Breweries returning better than expected returns in the form of dividends and capital appreciation.

Vetiva research, in its recently released report titled, "Nigeria 2018 Outlook: Acta Non Verba, (are you sure of this?)" said the growth would be boosted by stability in the country’s foreign exchange (forex) market in 2017.

The publication added that, “Despite the 2017 equity market rally driven by a partial liberalization of the country’s exchange rate regime, the Nigerian Stock Exchange remains relatively undervalued.

"Now, favourable external conditions support further growth; bolstered by stability in FX and energy supply, receding cost pressure and strengthening consumer demand. Amidst this, we project a strong equity market performance in 2018, with an estimated full year return of 15 percent-20 percent."

The cool off in the market in the last few days signals another opportunity for you to get in and make a few cool naira when the bull returns. I personally have the following stocks on my watch list for 2018 (please make sure you speak to your stock broker/adviser before you make a decision to invest in the stock market):

Banking stocks: GT bank plc, Zenith bank plc, Fidelity bank for rolling stock (I will buy it low and when I get a sizeable return I will sell) and UBA Plc.

Breweries: International Breweries, Nigeria Breweries

Fast Moving Goods: Cadbury, Pz Cussons and Glaxosmithkline Plc

The other investment opportunity I will share with our readers is property, according to Ray Withers the CEO of Property Frontier, “2018 is going to be an interesting year for property investment. Investors are facing a less bountiful environment, with plentiful, low risk returns in emerging markets drying up to a certain extent. What remains is a harder investment environment, but one that is potentially more rewarding. 2018 is likely to be a year that fortune favours the brave. A flexible strategy, open mind and hard-working property investment company will be the keys to success in the year ahead.”

The Nigerian real estate sector is turning the corner as the country’s economy appears to be emerging from recession. The easing of inflationary pressure, improved investment inflows, increased oil production and an improvement of foreign exchange liquidity, have all contributed to a positive growth outlook for the country.

The concept I will advocate going forward in 2018 for those interested is the formation of property investment clubs where friends or work colleagues come together and invest monthly for the purpose of investing their savings in real estate.

The one that we are arranging with a few diasporan friends is buying/leasing small hotels from owners and we put in some investment and our marketing skills to sell rooms and beverages to the public. The return on this sort of investment is in the region of 30-40 per cent and the individual investment is very low due to the fact that you are pooling resources together to invest.

I strongly encourage our readers to invest in stocks with strong fundamentals and companies that have reported their accounts and are open to analysts’ discussion of their numbers.  What we have seen so far is investors investing across board and in the event of shocks, those that are not fundamentally backed are the ones that will be most hit.

Destination: Heart Central

Destination: Heart Central

Prof. Mahmood Yakubu

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