WHERE TO INVEST IN NIGERIA IN JULY 2009???

WHERE TO INVEST IN NIGERIA IN JULY 2009???
Fixed Income, Quoted Stocks, un-quoted companies, Alternative Investments (in this case, Real Estate), Ponzi Schemes, Tianshi Products, Foreign Exchange transactions etc etc etc

All answers on a post-card please. In all honesty, all responses are welcome.

The Stock Market
The stock market has picked itself up from its lows. However the easy money of 2007/08 is not so easy to come by. The Nigerian Stock Market is behaving more like any other stock market in the world. The thundering herd has moved on and the market is left for those that use intelligence to pick their stocks. What shall it be – banks, cement, beer, manufacturing, technology, mutual funds?. You take your pick but please have a sound reason for doing so. Especially considering that we are no longer seeing 300% returns in 3 months. A mature market’s long term average on stocks is what, 9%? Nigerian stocks are still providing returns well above this, if you invested earlier in the year at the bottom of the market, you may easily be seeing returns close to 100% but did you have the balls to invest at the bottom? P.S. analysis is also not so easy to come by, so please do your own, there are opportunities to be found. As an aside, the banking stocks have recently taken a pounding with all the negative pronouncements coming out of CBN. P/E ratios can be found as low as 5-6. Now appears to be the time to buy. Unfortunately, I bought a little too early, but will sit things out.

The Fixed Income Market (Fixing your money)
What is Nigeria’s current inflation rate – circa 11%. What is the average rate at which a bank will be willing to provide you with a guaranteed return for locking up your money for a particular period of time. Approximately a 15% guaranteed return. One also has to take into account foreign exchange fluctuations. Are you loosing or gaining on the exchange rate. 15% is not bad compared to UK/US rates of 0.6% or thereabouts. 15% is not so great considering inflation of 11%. A 4% real return with a fairly large chunk of risk thrown in. Choose the stronger banks to provide you with a lower risk threshold and a hence a level of comfort that you will get your money back. Ask your new CBN Governor, Sanusi Lamido, which banks are considered strong and which are not.

Real Estate
I have written in the past about the interesting face of Nigerian Real Estate, specifically, Lagos and Abuja. With plots of land and finished property selling for astronomical sums of money, annual yields from rental returns could easily be below 5%. Compare this to fixing your money in a bank for 15%. A no-brainer perhaps or perhaps not. Why the attraction then to real estate. What is the long-term appreciation of land and property in Nigeria – 20/30/40% per annum. So perhaps not such a bad investment after all. Prices have stagnated or even fallen over the past year. Is this the time to buy? I do not have answers to these questions. Real Estate will always be a good investment if purchased at the right time and in the right place. Additional analysis needs to be done as to whether to invest in commercial office space, retail, residential, vacant land or some other permutation of real estate that will give you the greatest return over time.

Sorry, right now, it appears I have more questions than answers, but hey, that’s why investing is such good fun, you never have all the answers and you can gain a lot by adding the value that comes from doing your own research. I caveat that with the fact that investment can also be painful when you are losing money…