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  • A Promising And Attractive Young Frontier Market – Nigerian ETF 0 comments
    Jul 26, 2013 1:23 AM

    The Global X Nigeria Index ETF (NYSEARCA:NGE) is one of the Index's that has a long term association with growth potential. It provides the exposure to the most influential companies in Nigeria that bring out some good amount of revenues. Keeping in mind the fact that this ETF is a latest addition in the basket of financial vehicles, it still is considered a promising fund.

    Though this African country is the world's largest oil production nation, its social and political scenario and series of issues of civil unrest and corruption have not let it score too great. Nevertheless the population of this nation touches 160 million and the working potential ratio of this population is the targeted group with huge expectations. The new economic liberalization reform and strategy have been targeted to achieve the desired ratio of economic growth of this country. The effect of these new liberal policies can be seen in the telecom Industry which is doing remarkably well, and the privatization of the oil and gas sector has further improved the growth.

    The transportation sector is being inducted with a huge amount of investment from Qatar. This country emerges as one of the biggest recipients for the Foreign Direct Investments with a golden opportunity of sharing project investment with China as well.

    Interestingly the energy sector of this economy supports 80% of the revenue build up of the government.

    Nigeria is an active member of the Organization of the Petroleum Exporting Countries (OPEC) and has placed itself as on the third rank of suppliers after Venezuela and Saudi Arabia, focusing on the U.S. Market and demand for Petroleum. 41% and 24% of the Nigerian Index Fund is dominated by the Financial Sector and the energy sector respectively followed by the consumer discretionary. A growth of 6% in the GDP is anticipated this year and Gold Sachs has analyzed that Nigeria is expected to reach a population figure of the U.S. demographically and at present is the home to 15% of the entire population of the African Continent and is the "Next 11" Country concluded by Goldman Sachs. In the month of February, Nigeria has seen a drop in the exports of its crude oil due to a slump in the demand from the U.S.

    This fund is a frontier market in terms of investment opportunities and the perfect reason for investing in Nigeria with an emergent market. Here the privatization in the power sector and gas industries is the next prime reformation in the economy, where its companies are planned for further privatization. The hydro-power projects in Nigeria are being invested in by China.

    The southern part of this nation has adopted the capitalist way and is now on the verge of economic development, poised as the future booty of revenues. One of the hitches that come along with this economy are that it still does not prove to be a good market for banks because it is a relatively poor nation and is encircled with violence that subdues the travel and hinders the trade , a basic necessity for the up-liftment of the economy. It is in earnest need for economic liberalization and a power packed performance from its strong and motivated workforce. Namely two thirds of the current population of this economy is lesser than the age of 25. A more diversified economy needs to be achieved to stabilize and strengthen the quest for foreign Direct Investment and boost the Nigeria Fund.

    The Nigerian ETF is the perfect financial vehicle for those looking for lower correlation markets but with very potential growth aspects.

    Global X Nigeria ETF [NGE] scores heavily in the financial and energy sectors with consumer discretionary sectors coming third in the lane. This portfolio holds 28 stocks which are designed to be tracked by the Solactive Nigeria index fund and are the most important revenue potentials of the Nigerian Stock Market. This index is accustomed to act as a barometer for the development tracks and growth of this African nation.

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