Business Capital Market

Firm advises hedging against dollar risk

A capital market services provider, Infoware, has urged investors to ensure that dollar risks are hedged this year in order to secure superior investment advantage.

 

The investment history in the country, according to Infoware, has shown that the better-performing equities can vary from year to year, hence difficult to predict. “However amidst the obvious volatile stock market in Nigeria today, adventurous investors are seeking for how to hedge their portfolios and strategically position themselves in the market based on perceived implications of the incoming Trump administration on US dollar exchange rate.

 

In its recent newsletter made available to Daily Times, the company urged investors to take the benefit of market-friendly tools to mitigate losses, moderate shocks and grow earnings in 2017.

“In the new year, the ability to manage risk and maximize returns will be paramount in the minds of both retail and institutional investors,” said the company.

 

The tailored services, the company said, provide the most comprehensive set of tools both via its free Finance portal and on mobile applications.

The services to mitigate risks in 2017 financial year, the company said, would assist the investor to know the best entry and exit points to lock in gains in companies. “Investors are well advised to use the extensive but price trigger notifications to set their best entry and exit points and get instant email alerts in real time once those triggers are met.”

The company urged investors to ensure efficient tracking of their portfolios, creating personalized watch lists, following market news in real time as well as market analysis and market-focused programmes,

According to the firm, hedging dollar risk in 2017 is imperative as the US president-elect has assured of a greater focus on the devaluation of the dollar to offset mounting debt and lure American companies in the Diaspora.

It noted that currency swings could and do have the impact on foreign investors over selected periods, adding that in developed nations, when currencies are devalued, it is to encourage exports, because the prices of local products serve as an incentive and a toast for foreign buyers. However, that is not the same in Nigeria.

 

Infoware noted that even as the Nigerian capital market has remained bearish since the nation went into recession, the mood in the capital market is stimulated by the on-going political activities, foreign exchange rates and the usual forthcoming emergence of new US president.

 

The investment history in the country has shown that the better-performing equities can vary from year to year, hence difficult to predict, “However amidst the obvious volatile stock market in Nigeria today, adventurous investors are seeking for how to hedge their portfolios and strategically position themselves in the market based on perceived implications of Trumps government on US dollar exchange rate

 

Pre-and post-US election reports reveal that Trump has consistently stated that he favors low-interest rates, specifically for the purposes of weakening the dollar and making it cheap to service the U.S. debt pile. In fact, Trump’s plan to enact a tax amnesty for the repatriation of U.S. corporate profits would have more chance of getting through a Republican house and would be a massive USD positive.

 

All these expected developments would impact the Nigerian economy and the Nigerian capital market, a development which hedging could cushion its envisaged negative impacts

 

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Ihesiulo Grace

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