BusinessDay... the voice of business: Investors access funds from Japan to boost stock earnings

Investors access funds from Japan to boost stock earnings
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Godfrey Obioma on 24 March, 2008 11:12:00
 
The plot for profit boost for the foreign hedge fund is also meant to cover
losses suffered in developed markets of Europe, America and Asia, from the
credit crunch, analysts said.
Ike Chioke, deputy managing director, Afrinvest West Africa Limited, attributed
the inflow of the offshore funds to success of government reform measures and
perception in the international capital.
Nigeria’s market is fast emerging as the next investment destination window.
The development is further bolstered by the growing external reserves with oil
priced at over $100 per barrel.
Chioke, in an interview, said the appreciation of the Naira over the US dollar
has created opportunity for remittance of capital gain.
The market segment that attracts the preponderance of the foreign funds is
government bond, and Chioke attributed this to the impressive foreign sovereign
rating the country is enjoying.
Considered low risk instrument, the holders of government bond believe at 10
percent coupon rate, they would reap good margins compared to the low cost of
the funds sourced abroad.
It is believed that the returns made from the local market make up for the
losses recorded by matured markets currently hit by cash crunch.
Further stimulating foreign interest in Nigeria is the successful listing of
GTBank and Diamond Bank on the London Stock Exchange.
Local investors are not left out in the trans-border transfer of funds.
Business Day learnt that Goldman Asset, a Lagos asset-based management company,
borrowed $1 billion from a South Korean company at three percent for
disbursement to Nigerian manufacturers.
Called bonds with warrant, it has the characteristics of debt and equity with
variant of put and call options.
Abayomi Sanya, managing director of the company, said with the call option
variant, the instrument can be called back at an agreed date and cost while the
call option allows the investor some comfort.
Beneficiaries of the Asian bond include Neimeth Pharmaceuticals which deployed
the money to expand its business and grow bottom-line.