Thursday 12 July 2007

Navigating the Risks in Emerging Markets

'It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change' (Charles Darwin)

Even though my writings on this blog is focussed mainly on the economic growth of BRICS (Brazil, Russia, India, China & South Africa) and how to integrate your business and investment portfolio successfully into these emerging markets, it is worthy of note to also let you know that 'BRICS' is not the only place to invest or do business but many countries in Africa and Asia are also developing their markets aggressively. However, it is only savvy investors and forward thinking entrepreneurs that will be able to navigate the risks in these markets and come tops.

You may have heard of the tremendous opportunities in the Nigerian Capital markets. Personally I have achieve a 100% ROI in the past 15 months and that is without trading or monitoring my portfolios. Since this discovery I have been studying and playing in this market successfully and so far so good. I'll leave you with the following article on the current analysis of the Nigerian Capital Market. Its the first part on how to successfully navigate the risks in emerging markets.

Equity Market Activity July 05 2007 (By CSL Stockbrokers Limited)
The All-Share Index rose by 2.80% (month-on-month) to close the month of June at 51,330.46 while the market capitalization of the 205 listed equities closed higher at N7.817 trillion up by 5.89% for the month.

On a year-to-date basis, the NSE ASI has appreciated by 54.66% as at June 29th, 2007. A turnover of 12.78 billion shares worth N185.92 billion was traded during the month of June. In the month of June, there were 80 advancers and 53 decliners. The market breadth index for the month of June is 0.115 which is a decline of 65% relative to the market breadth index for May.

The stock market definitely cooled in the month of June. We sincerely appeal to investors to invest logically and not emotionally.

The market is still plagued by unexplained upward movements by firms without any recent news to warrant the surge in price. Some banks have not recently any results post-consolidation and they are rising aggressively.

We are highly concerned about the alleged price manipulation currently pervading the market; firms are buying their own shares through brokerage firms to boost their share prices either to keep up with a rival firm, to avoid disappointing investors who bought into their recent public offers, to offer their shares at a designated price for a future public offer and to propel the non-savvy investor to “chase the market.”

People have lost belief in fundamentals and are basically buying any stock in sight. Caution should be the watchword. The shallowness of our market is allowing this to happen. We need to have short selling in Nigeria and market makers to give the market a balance and reduce manipulative activities. We will delve more into this in subsequent editions.

Majority of stocks are still overvalued and will correct themselves without warning at any time. The following stocks have value in the midst of the market craze: Vitafoam, C&I Leasing, NBC, GT Bank, WAPCO, Flour Mills, Custodian & Allied Insurance, Nampak and WAPIC to name a few.

Public Offers, Listings, Private Equity, Private Placements & Bond Issues
Diamond Bank, Access Bank, Fidelity Bank, GT Bank, Obajana Cement, Dangote Flour, NAHCO, CCNN, Capital Hotel, IGI, Nigeria Reinsurance, Nitel, Ecobank, ETI, Kaduna Refinery, Port Harcourt Refinery, Japaul Oil & Maritime Services, Guaranty Trust Assurance, Morison Industries, Skye Bank, FCMB, Continental Reinsurance, Wema Bank, Spring Bank, Design Union Developing Limited (a key player in the real estate sector) and Costain West Africa Plc are expected to come to the market through initial public offers or public offers.

So what is your view on developments in the stock market? Download the full Report

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