The International Monetary Fund (IMF) has forecast that Nigeria’s economy will contract by 3.4 percent in 2020, which will bring a lot of economic dislocation and pain.
However this also presents an opportunity for investors to pick up assets cheaply and gain the upside once they rebound. MoneyCentral looks at 4 things to invest in as the recession nears.
Telco Stocks
It’s no secret that Telecommunication firms including MTN Nigeria (MTNN), Airtel and other have been big winners since the era of social distancing and remote working begun in March as a result of the coronavirus pandemic.
MTNN recorded a surge in data revenue in the first quarter of 2020, where businesses in some key states had to adopt remote working and the mobility of people slowed due to the COVID-19 pandemic.
Data which made up 22.6 percent of service revenue (N328.5bn) grew 59.2 percent year-on-year in the quarter and 12.3 percent from Q4 2019.
MTN Nigeria stock is up +6.67 percent since the beginning of 2020, compared to the Nigerian Stock Exchange (NSE), which has returned -10.42 percent year to date.
Stocks that Pay Juicy Dividends
Looking at the dividend yield can give an indication of attractive stocks to buy in an environment where asset prices are falling.
The dividend yield is the amount of money a company pays shareholders (over the course of a year) for owning a share of its stock divided by its current stock price—displayed as a percentage.
Some stocks with high dividend yields currently in the market include Guaranty Trust Bank (12.7%), Zenith Bank (18.42%) and Dangote Cement (10.81%).
The yields the stocks pay are considered juicy because they compare favourably to 1 – year Treasury Bills that currently yield 4 percent and average rental yields currently in the 4 – 6 percent range.
Bitcoin & Gold
With global Central Banks printing trillions of dollars to help stimulate their various economies as the coronavirus pandemic causes pain, the prospect of debasing of fiat currencies has once again come to the forefront.
Gold which is often seen as an inflation hedge has performed well so far in 2020 and rose by 0.8% this week. Last month, Bank of America Corp. forecast that Gold could rally to as much as $3,000 an ounce.
Bitcoin has also been touted as a form of digital Gold by crypto enthusiasts and has seen some bullish activity lately.
Invest in and Upgrade yourself
If you lose your job during this coronavirus economic recession, you can rebound by investing in yourself. You can take online courses to gain additional knowledge or skills that could help you get a better job.
Businesses will fail but others will rise from the ashes of the current coronavirus economic crises and people need to be well prepared for life on the other side.