The pandemic crushed Nigeria’s economy. It led to a deep recession, inflation, devaluation of the naira, and discounted equity prices (all likely to be temporary) which left many Nigerian businesses and assets greatly undervalued in comparison to their African contemporaries.
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However due to an increase in crude oil prices and production the Nigerian economy has been estimated by the data retrieved from the African Development Bank to grow by 1.5% in 2021 and 2.9% in 2022. Also, the reopening of the border will increase economic activity which should reduce the pressure on domestic prices and inflation.
2022 is a great year for investors as the economic impact of the Covid-19 pandemic is reducing and businesses are building resilience. Hence we will be highlighting Investment Opportunities for Nigerians in 2022 as suggested by experts selected by Nairametrics.
1. Nathaniel Saleh, Structured Finance Analyst at Link Group
He recommended investing in companies like PubMatic and Meta in 2022 as they have proven themselves to be strong and competitively advantageous. PubMatic is a digital advertising technology company that links publishers of videos, websites, and mobile apps with advertisers to facilitate them finding space needed to market their products, with publishers receiving super revenue by marketing these products through the respective platforms.
This company has shown great promise within less than a year since its IPO. According to Yahoo Finance, the stock is currently undervalued trading at $37.69 per share. PubMatic specifically reported year-over-year revenue growth of 54%, a year-over-year net income growth of 117%, and a year-over-year adjusted EBITDA growth of 81% and saw a total of 60,000+ advertisers placing ADs on the platform.
Meta formerly known as Facebook Inc is a multinational technology conglomerate and the parent organization of Facebook, Instagram, and WhatsApp, among other subsidiaries. The company has grown significantly in 2021 starting from about $275 all the way up to above $375 and currently, one share of Meta is turning at $333.12 with a 52-week low of $244.61 and a 52-week high of $384.33.
The average analyst price target is $401.93 which is about 20% higher than the current price of $333.12. In September of this year, the company recorded revenue of $29 billion for the quarter which was a 35% year-over-year increase.
2. Adaobi (Eziokwu) Okonkwo, Treasury Senior Associate Leatherback
The pandemic crushed a lot of economies including Nigeria’s leaving Naira at a depreciated value of over 3% (Dec 2020; 400.13, Dec 2021: 414.13) (FMDQ ). The new COVID Omicron strain could affect economic activity globally, hence the most favourable kind of Investment Opportunities for Nigerians in 2022 would be an investment in dollar-denominated assets to avoid depreciation of Naira making their investment worse.
This kind of investments could range from dollar deposit account (yielding at least 5% p.a.) for investors who want to play it safe and investing in the equities market like telecommunications (e.g. Twilio), Fintech companies (So-Fi Technologies, Upstart), and the more popular ones like Apple, Amazon, Netflix and the crypto market for the more risk-loving investors.
She further recommended that the “Key to staying safe and profitable is a diversified portfolio. Invest a decent proportion of your earnings locally in liquid investments (T-bills, commercial papers, money market fund) as cash is King, especially in an uncertain economy.”
3. Mosope Arubayi, SSA Economist (West & Southern Africa) & Market Strategist at IC Group
According to Mosope Arubayi, the first thing you must take care of investment-wise in 2022 is protecting your portfolio from inflation as inflation is likely to remain constant in 2022. Hence, investment in commodities is the best option. Investors may want to reduce their traditional fixed-income allocations and increase their exposure to real assets and Oil and gold markets as their growth potential is really high, and their stocks are a decent long-term shield against inflation erosion, especially if you zero in on companies with pricing power.
She also predicted interest rates to rise modestly in 2022 from current low levels leading to low or potentially negative returns for fixed income, hence equities will be more favourable than bonds.
Investment in financial technology is also very favourable, it’s one of the relatively risk-free Investment Opportunities for Nigerians in 2022. The pandemic necessitated banking customers completing transactions online or via mobile devices. Even before the pandemic, a predominantly younger generation of consumers relied on mobile devices to pay for goods and services, transfer money, and trade stocks and cryptocurrencies. That trend is likely to continue in 2022.
4. Victor Ofili, Head of Research at Cowry Asset Management Limited
Victor Ofili suggested investing in companies that have recently recovered from a low base revenue stream and have also boosted profitability in 2021 as the share prices of this set of companies would become more attractive in the first quarter of 2022. They are likely to offer an increased dividend payout to their investors between December 2021 and March 2022.
He also proposed that medium to long-term investors can invest in undervalued stocks; particularly of those companies that have their share prices trading below their book value per share and have recorded higher profitability with a declining leverage ratio. He also recommended that long-term investors should target the second quarter of 2022 to buy the anticipated dip, this would enable them to position at a comfortable support price level that comes along with a higher dividend yield.
5. Thelma Ugonna Ohiri-Anyanwu, CFA Management Associate at First Bank of Nigeria
She predicted that if the fourth wave of Covid persists and there is an increase in commodity prices and high inflationary pressures the right investment approach would be looking out for investments that would provide positive real income, provide stability, grow my funds and add value by investing in direct agriculture, digital currency, dollar funds/Eurobonds, value stocks and explore real estate investments through investment in shortlets and leasing opportunities.
6. Oluwaseun Agbejimi, AVP/COO, TradeFi at Comercio Partners Asset Management
Oluwaseun recommended investment in local equities like Zenith Bank and MTNN among others, as it is arguably one of the calculated Investment Opportunities for Nigerians in 2022. He suggested  Zenith Bank because of its solid fundamentals and its consistent dividend payout and high dividend yield which remain very attractive for investors and MTNN because the outlook for revenue growth and profit remains positive, even without a Payment Service Bank (PSB) licence.
He also pointed out that the nature and appetite of the investor would determine the investment opportunities to be engaged in. If you are a low or medium risk-taker you would be best suited for the fixed income market and Federal Government Securities while the big lion and risk-takers can opt for equities space and the likes
He also stated that fixed-income assets are expected to have large returns given the expected borrowing of N6 trillion to fund the 2022 budget coupled with constant unorthodox Cash Reserve Ratio (CRR) debit by the apex bank.
Note: Data and Figures in this article are culled from Nairametrics.
