Emeka Ucheaga Advisory

Dear Speculators, The gloominess of the Nigerian economic outlook has significantly knocked down the prices of some financial assets but the real value of some of these assets have been mildly affected. While recounting the economic misfortune that has befallen the country in the last two years is inevitable, dwelling on the past is a perfect time wasting activity. Luckily, investment is forward looking and not regressive thinking. The past is a great indication of the future but not a mirror for prediction. The randomness of the world ensures that yesterday looks at least slightly different from tomorrow. And if we have learnt anything from the history books, it is that good things do not last forever and bad times always have an end. Life is by definition cyclical. The key questions to ask before buying or selling any financial asset is; will the current economic situation last forever? Will the inflation rate remain in double digits over the next 5 years? Will the Nai...

Dear Speculators, Interest rates has been one of the main topics of business discussions in 2016, maybe even more popular than crude oil prices. While Americans and Europeans are wondering when interest rates will go up, Nigerians can't wait for rates to go down. Both regions can't seem to jump start their economies regardless of what the Monetary Policy Committee is doing. Perhaps the fault of the current economic crisis is less on the monetary policies of the Central Banks and more with the weakening fundamentals in the global economy. If rates were to go up before inflation in Europe, the economy could overheat and enter a recession but if rates were to go down in Nigeria, negative real yields would be unattractive to investors. The double digit rate of inflation in Nigeria is currently caused by an overshoot of the dollar price and harsh restrictions on capital outflows in the country. Both almost unavoidable problems given our current circumstances. Historical...

Dear Speculators, The catastrophic collapse in the value of Naira in 2016 has brought more bad news than good news to Nigeria. This has come at a time when currency manipulation in Japan, China and Switzerland to purposely erode the value of their currency in order to gain trade advantages has angered many foreign governments especially America. Britain was lucky to have had the Pound devalued by the financial markets in the aftermath of the Brexit to the delight of the Bank of England whom like many other Central Banks in the western world are now inflation seekers. But not Nigeria, we don't need a weaker Naira, at least not now. Unfortunately, the drastic fall in the oil price, current account deficit, lower foreign external reserves and withdrawal of foreign investments from Nigeria has dragged the Naira about 58% lower since its January levels at the interbank market. This has almost doubled the rate of inflation in the last one year as imported products make up a si...