Hedge Funds Vs Nigerian Stock Exchange..

[Funso98]

Does anyone have any information on how active Hedge Funds (a secretive, and exclusive investment option open to super rich investors world wide and exempt from many regulation applicable to Mutual Funds, and other investment options) are in the NSE?

They are beginning to draw a lot of negative interest in the US.

If these funds were to crash suddenly, how will it affect the Nigerian market. Some of these funds invest a huge amount of money in offshore and emerging markets like Nigeria. What happens if they withdraw their investments suddenly?

The word coming out is that these funds may begin to tank out soon. It will be sad if nickel and dime investors like us are left holding the bag.

Any takes?

[oseitutu]

What is your source and why are they leaving? Money is magnet, nobody who is present in hedge funds will leave at this point in time. There is still money to be made!

[Funso98]

Originally Posted by oseitutu

What is your source and why are they leaving? Money is magnet, nobody who is present in hedge funds will leave at this point in time. There is still money to be made!

Oseitutu, I was listening to an analysis recently about the kind of returns these funds have generated in the last few years. Experts are comparing it to the tech boom that preceded the bust of 2000-'01, and it is speculated that those who have made great profits may want to move to the more secure investment options like mutual funds. Investment managers too are re-strategizing by targeting upper middle class investors who may not be as rich as their current clients.

It is good to watch the market trend!!

[Curious]

The little I've heard about HFs activities on the NSE is that its not very large on the day to day trading basis. The reality is that even with all the "action" going on in Lagos, there simply isnt enough liquidity in the market. Keep in mind that the Sum market cap of all the currently listed stocks is about $50Bn, its quite hard to trade in size without getting board positions in some of these companies (something which most HFs arent interested in ... except the active investor or maybe risk arb ones)

I gather that there are two popular ways HFs play the Nija market; Large IPOs/Share offers (Dangote and FBN being quite popular) and Fixed Income. Reasons are that both allow one to trade in some size without really moving the market whilst making a decent return.

[wanaj0]

Originally Posted by Curious

The little I've heard about HFs activities on the NSE is that its not very large on the day to day trading basis. The reality is that even with all the "action" going on in Lagos, there simply isnt enough liquidity in the market. Keep in mind that the Sum market cap of all the currently listed stocks is about $50Bn, its quite hard to trade in size without getting board positions in some of these companies (something which most HFs arent interested in ... except the active investor or maybe risk arb ones)

I gather that there are two popular ways HFs play the Nija market; Large IPOs/Share offers (Dangote and FBN being quite popular) and Fixed Income. Reasons are that both allow one to trade in some size without really moving the market whilst making a decent return.

Effect is still minimal but growing. A fund just divested from ETI.

That said, the small liquidity in Nigeria means if there is divestment, there are more than enough funds to acquire such holdings. From the PFA funds to other emerging market funds there should be no problem at all.

Also with a max drop of 5% in share price on any given day, the NSE is still well protected. No doom yet. Enjoy the ride while it last. Right now, there is still so much potential in the market.

[oseitutu]

Fund managers are launching new funds in the Western Countries to invest in countries like Nigeria, called Frontier Markets. In fact one was Launched in June. Full article here.. So what is this talk about divesting. If some people divest, they are probably repositioning. We have not peaked yet.