Wednesday, February 06, 2019
06:10 PM / Proshare
Making Financial Boxes Disappear in an Era of Uncertainty
Stock markets have brought tears to the eyes of investors in 2018. The problems have not exactly been that of the markets themselves as it has been one of the global and local challenges facing diverse economies. Nigeria has seen its economy grow by a laggard +1.81% in Q3 2018 as budget deficit has risen to -5.1% of collected revenue. This has resulted in two difficult developments:
Graph 1: Nigeria’s Fiscal Deficit as % of GDP Ratio 2008-2017
Source: National Bureau of Statistics (NBS)
The emerging global financial ecosystem is, therefore, laying a sledgehammer to past barriers to entry and exit across markets. Not only are foreign portfolio investors (FPIs) determining the swings in advance economies they are equally shaping movements in emerging markets, therefore, the good old days where market information reliability and timeliness were of limited concern are over. Today information is as central to the lives of markets as blood is to the sustenance of life. In the new ecosystem, quality and speed of information are at the heart of proper assets valuation and arbitrage strategies. The Lords of the market are no longer those with the biggest-sized portfolios but those with the fastest and smartest access to qualitative and actionable market intelligence.
Thinking outside the box was a brilliant management and portfolio strategy a decade past, but in the new financial world of digitally-modified and tactically-impatient markets, the box has disappeared. Information is an actionable variable that determines whether people will lose or win in the new financial landscape. Money, of course, remains important to potential investment yields, but its potency as an investment factor has been tempered by the power of information that runs on steroids, as it zipping down telephone lines, sizzling through binary codes and whizzing past analogue machines tearing holes in the pockets of the slow and piling cash into the wallets of the fast and clever.
New asset trading floors are increasingly providing investors an opportunity to deepen and widen investment portfolios. Competition amongst the different tradeable securities markets is making asset pricing more efficient and reliable as investors are no longer restricted to the imperial monopoly of one market or one set of asset classes.
Chart 1: Technology-Market Evolution Matrix-NASD Report -Proshare
The New Imperatives
The borderless investment world that is increasingly emerging has created previously unthinkable opportunities for markets such as the NASD OTC. But sustainability must still require:
Goodbye Yesterday, Hello Tomorrow
Investors only see yield and risks not borders or nations. Money and capital markets are one big alphabet soup of winners and losers. Yesterday the names and sizes of countries and continents were crucial to investor interest, but today and definitely tomorrow investors are more squarely hooked on yields and risks. The number of green plusses relative to red minuses regardless of continent or country will decide where the big bucks go.
It is this context that the engagement with investors is crucial to market success. Expanded and timely Information dissemination on the NASD OTC is not a me-too exercise in ego-tripping; it is an imperative shift towards meeting the market of the present and future at their critical touch points; it separates a market with big aspirations for sustained growth from one with a small appetite for the future and a willingness to disappear into the twilight of investment martyrdom.
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Related News From Proshare 2018 Review and 2019 Outlook Report - Surviving Uncertain Times In The Nigerian Financial Market
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2. Proshare NCM 2018 Review and 2019 Outlook (17) - Eight Financial Services Stocks Dominate the List of 28 Stocks You Should Not Touch
3. Proshare NCM 2018 Review and 2019 Outlook (16) - Stocks Off and Near 52-Week Highs and Lows
4. Proshare NCM 2018 Review and 2019 Outlook (15) - Extracts of Financials of Quoted companies – DANGCEM Tops on Revenue, PAT and Net Assets
5. Proshare NCM 2018 Review and 2019 Outlook (14) - Growth of Securities Listed on NSE – Total Securities Listed Increased By 9.58%
6. Proshare NCM 2018 Review and 2019 Outlook (13) - Forty-Six Financial Services Stocks Are Penny Stocks in 2018
7. Proshare NCM 2018 Review and 2019 Outlook (12) - Foreign Portfolio Participation in Equity Trading in 2018
8. Proshare NCM 2018 Review and 2019 Outlook (11) - Market Records 32 Gainers to 109 Losers in 2018; CCNN Tops Gainers List
9. Proshare NCM 2018 Review and 2019 Outlook (10) - NSE ASI Performance Review and How Each Company Fared in 2018
10. Proshare NCM 2018 Review and 2019 Outlook (9) - New Listings and De-Listings in 2018: Market Records One New Listing and Four De-listings
11. Proshare NCM 2018 Review and 2019 Outlook (8) - Trading Statistics in 2018 – Total Market Volume Increased By 5.92%
12. Proshare NCM 2018 Review and 2019 Outlook (7) - Bond Market: Safety In A Season Of Uncertainty
13. Proshare NCM 2018 Review and 2019 Outlook (6) - Mutual Funds -A Tale of Mixed Fortunes
14. Proshare NCM 2018 Review and 2019 Outlook (5) - Market Records 8.53% Growth in Q1’18; Negative Sentiment Permeates in Subsequent Quarters
15. Proshare NCM 2018 Review and 2019 Outlook (4) - Economic Indicators: Moving Forward Slowly
16. Proshare NCM 2018 Review and 2019 Outlook (3) - African Markets Still Depressed
17. Proshare NCM 2018 Review and 2019 Outlook (2)- Global Market in Tumbles
18. Proshare NCM 2018 Review and 2019 Outlook (1)- Surviving Uncertain Times in the Nigerian Financial Market
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