Ugodre Obi-ChukwU
The Nigerian economy is currently in a tailspin and there is panic everywhere. Investors, both local and foreign are selling off their investments as fast as they can and cutting their losses along the way. The stocks market has already lost almost N2tn this year alone hitting lows never been seen since 2012. The exchange rate is also at an all-time high hitting N305 at the parallel market. The price of crude also broke the $30 support and touched $27 earlier on Monday.
As expected, most people are worried and wondering what next to do with their money? It is not surprising to see people panic at times like these. For some investors though, they live for times like these and do the exact opposite of what everyone is doing. The upside for them is that when their bets pay off they will make a lot of money. We spoke to some of these guys and here is where they want to invest their money in.
Forex - A lot of people are indirectly shorting the naira and stashing up their forex hoard. With the value of the naira plummeting by the day, these guys are reducing their positions in naira and increasing their position in forex such as the US dollars. Investing in forex can include ordinary buying and selling of forex to more sophisticated products such as forex trading. A currency speculator we spoke to confirms that while 2015 was a year to forget for many, it was actually a year to remember for him. He made a ton of cash speculating on the naira. Though not morally right, he believes the capitalist in him fuels his desire to profit in a crisis situation.
Foreign currency income - Some investors have also seen this as an opportunity to buy assets abroad. Rather than just buy forex and keep the money in banks, they invest it in real estate abroad giving them an opportunity to earn forex. Some also invest in double digit yield investments such as investing in wines. Wine investment involves buying a stock of wines that increase in value as they age. The profits are said to be in the double digits.
Crude oil inverse - This essentially is shorting the price of crude oil. By shorting oil, investors are betting against the rise in the price of crude oil and make money when crude oil price continues to drop. There are several Exchange Traded Funds abroad that sell funds dedicated to crude oil inverse. This business is lucrative at the moment and has returned close to 40 per cent for some investors in the past year.
Stocks - Yes oh yes, the stock market is dropping and investors are taking off on their heels. However, this market is still one of the quickest way to make money in Nigeria. With stocks at historical lows it is expected that the bottom will soon be reached. Some analysts also believe that stocks are still fundamentally fine and are only being sold off for reasons not due to their fundamentals but for the macro economic situation in the world and in Nigeria. They believe that once things change and the outlook of the world economy turns from gloomy to bright, stocks will start to gain at a faster pace. However, one must be cautious to cherry pick stocks. You will have to go for stocks that show the greatest propensity to attract investors' money whenever they return thus gaining fast.
Bitcoins - In case you haven't heard of them before, these are type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of any central bank in the world. While most people view bitcoins as a currency it best functions as an asset. You make money when the value of your bitcoins rises. Bitcoins are highly risky and can make you lose a lot of money. But like they say: the higher the risk, the higher the reward.
Invest in real estate - Real estate is still the preferred store of value for a lot of Nigerians. While it is true that the price of real estate has dropped considerably since the currency crisis began last year, many still see this as an opportunity to buy assets cheap. Realtors inform Nairametrics that real estate prices are crashing, though not at a rate one will expect, but at a rate never seen in ages. A lot of apartments and offices are vacant with no one willing to buy them. An investor with deep pockets should seize this opportunity.
Exports - Businesses focused on exporting commodity-based products are expected to earn big with the present government in power. They have promised to increase Nigeria's mining activities and will like to rely on that to diversify the Nigerian economy. Start-ups focused on mining are potentially good investments for people with deep pockets. It is also an avenue for earning forex and paying fewer taxes. A company set up to export commodities such as coal, iron ore, cocoa might be setting themselves up for a lucrative future.
Healthy living - Nigerians are increasingly getting conscious of their health and are ready to spend on health-related products that are proved to have worked. It could be foodstuffs, packaged food, beverages, gadgets etc. provided they are related to healthy living. Though still a niche business, investors in this business who have positioned themselves years ago are said to be making a lot of money.
Content creation - Content is king and is becoming something of a cliche, however it is quite the reality. People particularly in the entertainment industry are making millions of naira churning our content at a spate never to be seen in Nigeria before. Music producers are said to now produce music on the fly with some of them carrying their studio in their laptop bag. Fortunately for them, Nigeria is not too concerned about quality, so the more content you create the more popular you become and the more money you make.
Thursday, January 21, 2016