Analyst at the research arm Meristem Securities Limited in an outlook report has called on investors to key into investment grade commercial papers including on bonds, among others.
The report titled, ‘Unmasking Value in a Scourge’, analyzed the position of the global and domestic economy, with a comprehensive focus on trends and activities within various economic sectors that could help avert a prolonged global recession.
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It noted that for the rest of the year, there are still a lot of uncertainties in the equities market.
For fixed income, the analyst advised investors to take advantage of investment grade commercial papers, combined with a mix of long and short dated bonds which have attractive yield income.
“Thus, we advise a strategy which places a focus on playing at the long-end of the curve to prevent reinvesting into a low-yield environment.
“We do not recommend concentrating on treasury bills at this time, given the extremely low yields on offer.
“The general investment landscape is already plagued by a high and rising inflation which has kept the real rate of return in the negative for months now. Thus, the yield on treasury bills will further worsen real return.”
The outlook highlighted in depth the effect of the COVID-19 pandemic and the resultant consequences to capital flow reversals, external reserves, exchange rate, inflation and other macroeconomic variables as it relates to the domestic economy.
Commenting, Deputy Managing Director, Meristem, Sulaiman Adedokun, said: “The Meristem research outlook has been able to unearth profound insights for our clients, investors and the general public, who seek to revise their investment strategies for the remaining part of the year.”