Investors update: November 25 2022

Nigerian equities remain bullish despite hawkish fed stance

Highlights

• Trading activities on the floor of the Nigerian Exchange (NGX) closed Thursday with a gain of N203 billion ($457 million) in market capitalization, as bulls maintained their grip on the local bourse.  
• The All Share Index (ASI), increased by 0.80% to close at 46,604.94 points.  In the same vein, market capitalization appreciated by N203 billion. 
• The stock exchange market value stood at N25.3 trillion while since the start of the year, the stock market has advanced by 3888.5 basis points or 9.10%.

Source: Nairametrics

Our Takeaway

The Nigerian equities market has been one of the most resilient in emerging markets this year, amid the ongoing global macroeconomic headwinds and depressed global capital markets. It remains relatively cheap for EM- or Africa-focused portfolio investors on a Price-to-Earnings (PE multiple) basis.

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SA fintech Revio bags $1.1m to tackle payment failures

Highlights

• Revio, a South African API payment and collections company that makes it easier for businesses across Africa to connect to multiple payment methods and manage payment failures has raised $1.1 million in seed funding.
• Fintech investor Speedinvest led the round, with participation from Ralicap Ventures, The Fund, and Two Culture Capital. Several angel investors also participated.
• With the new funding, the startup plans to launch new products and expand its team and presence across emerging markets.

Source: TechCrunch

Our Takeaway

In Africa, up to three out of every 10 payments fail—compared to the 0.7 global average—due to the fragmented payments landscape, higher dispute rates, invalid or expired card details, false-positive fraud checks, multiple or dormant accounts, and insufficient funds. The failure rate results in billions of dollars in lost revenue, estimated at $14 billion on the continent, which also has a 320% higher churn rate than mature markets. With digital payments growing at 20%+ year-on-year, this problem will only intensify and that’s where Revio has pitched its tent—helping companies recover lost transactions.

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JP Morgan sees global bond yields dipping in 2023

Highlights

• Global bond yields will likely fall slightly in 2023 as the balance between demand and supply will improve by $1 trillion, according to American investment bank JP Morgan.
• There will be a $700 billion contraction in global bond demand next year compared to 2022, while bond supply will likely drop by $1.6 trillion.
• While major central banks trimming their balance sheets in 2022 was the single largest contributor to deterioration in bond demand, sell-offs by commercial banks and retail investors were also much higher than estimates.

Source: Reuters

Our Takeaway

Bond yield is the return an investor realizes on a bond. By that measure, this year was one of the worst for bonds in history. While short-dated US Treasury losses were limited to less than 10%, the 23% drop in annual returns of the 10-year US Treasuries through last month was the worst since the turbulent infancy of 1788. In Africa, the Ghanaian government is asking both holders of its international and domestic bonds to accept losses of as much as 30% on the principal and forgo some interest payments.