Getting diversified exposure overseas can benefit a portfolio by adding a growth factor amid shaky markets. When things stabilize, these growth opportunities — like Nigerian equities — have the potential to shine.
Emerging markets (EM) were one of the most volatile areas amid the pandemic. With certain countries responding differently to the pandemic than those with the necessary regulatory measures in place, some were able stave off the economic impact of COVID-19.
Fast forward to now, and it appears that most countries are catching up to the pandemic, dealing with the new normal amid a global vaccination move. That said, investors are warming up to EM opportunities once again.
One place to look is Nigeria, which is starting to exhibit signs of a recovery. According to the Premium Times Nigeria, the gross domestic product (GDP) grew by 3.4% last year.
This recent uptick represented the most growth in GDP since 2014, based on the National Bureau of Statistics. While it was almost half that number in 2014, it’s a representation of progress happening in the country.
“Growth in the last quarter of the year was however the slowest when compared to the two previous quarters,” the Premium Times reports. “The GDP expanded 3.98 per cent between October and December over the same quarter in 2020, less than 4.03 per cent growth rate recorded in the third quarter and 5.01 recorded in the second quarter.”
“The fourth quarter growth, while slower, was the fifth straight quarter the nation recorded positive growth since the 2020 Covid-triggered recession that followed economic contraction of -6.10 per cent and -3.62 per cent in the second and third quarters of that year,” the report adds further.
Capturing Growth Potential in Nigeria
Given this potential growth opportunity, one way to get exposure to Nigeria is with a thematic exchange traded fund (ETF). One such ETF is 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 underlying index is designed to represent the performance of the broad Nigeria equity universe, while including a minimum number of constituents.
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