In normal and volatile times, it is always important to maintain an investment portfolio that is diversified across currencies. We normally recommend that at least 20% of an investor's portfolio should be in foreign currency. An investor’s objective could be to hedge against a potential devaluation of the Naira or earn real returns on investments, given limited high-yielding local currency investment options. The Legacy USD Bond Fund (LUBF) can assist investors in achieving both goals. The LUBF is a mutual fund registered with the Securities and Exchange Commission, Nigeria. The Fund’s primary objective is to generate stable income over the long term. With a minimum of US$1,319.40, investors will gain exposure to Sovereign and Corporate US Dollar Eurobonds issued by the Nigerian government and Nigerian corporates. Also, once an investment has been made, the investor can monitor the value of the investment by clicking here. Please see Product Focus below for further details.

The ICT Sector struggles to maintain growth momentum.

Based on data from the National Bureau of Statistics (NBS), the Information and Communications Technology (ICT) sector’s growth rate declined to a five year low of 6.69% y/y in 3Q 2023 compared with 10.53% recorded in 3Q 2022 and 8.60% recorded in 2Q 2023. The sector contributed 15.97% to Nigeria’s total GDP, higher than 15.35% in 3Q 2022 but significantly lower than the 19.54% contribution in 2Q 2023. The ICT sector comprises of telecommunications and information services, publishing, motion picture, sound recording, music production, and broadcasting.

The y/y decline in the growth rate of the ICT sector was largely driven by the decline in the growth rate of the telecommunications subsector, which fell by 23.06% y/y to 7.74% in real terms. Broadcasting declined by 51.7% y/y in the quarter, contributing 4.45% to the overall performance of the ICT sector. The telecommunications sector has also been affected by the issues that the country's economy is currently facing as reflected in dwindling industry numbers. Mobile subscriptions have declined by 2.85% to 220.7m in August 2023 from 227.2m in February 2023 while teledensity is down 2.8% to 115.63% in August 2023 from 119.01% in February 2023.

The negative effects of the Naira devaluation and other government macroeconomic policies have impacted both the telco players and the purchasing power of subscribers. These policies have significantly impacted on the sector's profitability while also lowering their capex intensity. However, we maintain our view that the ICT sector, which is predominantly driven by the telecommunications sector, is primed to grow, given the opportunities in the sector. The launch of the 5G network and the continued growth of the 4G network will continue to drive growth. Also, we expect to see the fintech segment contribute significantly to total revenue in the medium to long term. Long-term growth in the telecommunications sub sector will be driven by new technologies, increased smartphone usage, more digital consciousness, and increased collaboration with the financial services sector.

• FX: Last week, the Naira traded at ₦833.36US$ from ₦840.04US$ in the interbank market.
• Bonds: In the secondary market for Federal Government of Nigeria (FGN) bonds, yields increased across most maturities. The yield on the 3-year FGN bond increased by 6 basis points to close at 15.22%, and that on the 30-year FGN bond declined by 32 basis points to 17.72%. Indicative yields on US Dollar Eurobonds issued by Nigerian entities were between 8.47% and 15.16%, depending on maturity.
• Oil:The price of Brent increased by 1.99%, from the previous week’s closing price of US$81.96bbl to US$83.59bbl.
• Equities: Last week, the NGX All-Share Index gained 0.17%. The November 2023 YTD return was 38.98%. The Consumer Goods sector declined by 0.53%, on average. CADBURYgained 11.23%, and DANGSUGAR lost 1.64%. For the Brewers,NB lost 5.00%. The Industrial Goods sector gained 0.04%%, on average. The NGX Banking sector gained 1.94%, on average GTCO gained 5.41% and STANBIC lost 7.08%. In the Agriculture sector, PRESCO gained 2.53% and OKOMU remained unchanged.