Are Nigerian Stock ETFs the Ultimate Value Play? | ETF Trends

High-level officials in Nigeria are forecasting a comeback for the country’s economy in 2021. This is a positive sign for ETF investors looking for value plays in emerging markets with funds like the Global X MSCI Nigeria ETF (NGE). NGE seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Nigeria Select 25/50 Index. The fund will invest at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts (“ADRs”) and Global Depositary Receipts (“GDRs”) based on the securities in the underlying index. The underlying index is designed to represent the performance of the broad Nigeria equity universe, while including a minimum number of constituents. The fund has recently moved past its 50-day moving average. Per its relative strength index (RSI) indicator over the past year-to-date, the fund is below its overbought territory. NGE Chart

Nigeria Set for Growth in 2021

Per a Nasdaq article, the country’s central bank governor noted that “Nigeria’s economy is set to grow by roughly 2% in 2021. Africa’s largest economy slipped into recession in the third quarter, hit by the COVID-19 pandemic and low oil prices, but central bank governor Godwin Emefiele said he expected it to be short-lived.” “Emefiele said he also expected double-digit inflation to ‘moderate’ by the first half of 2021, and stood behind the bank’s foreign exchange policy, which he said was allowing a gradual liberalisation of the naira and was ‘in line with best practices in other countries,'” the article added further. The financial sector is about a 50% portion of the fund’s holdings as of December 8, which means its success hinges on policymakers implementing the right strategies to shore up the banking industry. They’re already one step ahead with the introduction of the Banks and Other Financial Institutions Act (BOFIA) 2020. “One of the key provisions of BOFIA 2020 is to make bank officials personally liable for contraventions of the terms of a banking licence,” an article noted in The Africa Report. “Joachim MacEbong, senior analyst at SBM Intelligence, thinks this ‘should improve compliance and reduce recklessness’.” For more news and information, visit the Tactical Allocation Channel.