What is the new normal for investors amid COVID-19 crisis?

The Nigerian government has urged businesses to use the next two weeks of the phased easing of the lockdown to prepare for the 'new normal'. As the country navigates the challenges posed by the COVID-19 crisis, investors are faced with uncertainties and opportunities in the financial markets. Tajudeen Ibrahim, the Vice President and Head of Research at Chapel Hill Denham, shared insights on how investors can navigate this unprecedented time. In the current environment, Ibrahim highlighted the importance of investors increasing their exposure to resilient companies. He emphasized the significance of investing in sectors such as banking and food businesses that have shown strength despite the challenging economic conditions. On the fixed income side, he recommended investors to consider short-dated instruments in the money market and bond market. For sectors that have been hardest hit by the crisis, Ibrahim advised portfolio managers to adopt a defensive strategy. Investing in defensive stocks and focusing on companies that have proven resilient can help mitigate risks in volatile markets. Additionally, he suggested positioning in short-term instruments to buffer against market uncertainties. One of the standout sectors amid the pandemic has been the telco space. With the increased demand for data due to remote work and telecommuting, telcos are experiencing a surge in revenue from data services. Ibrahim sees telcos as strong investments in the current landscape, particularly as data consumption continues to rise. He also highlighted the growth potential in e-commerce, especially for banks offering strong data services to customers. As the foreign exchange market faces challenges with diverging rates, Ibrahim pointed out concerns over currency devaluation. The disparity in exchange rates across different markets underscores the need for policy adjustments to achieve a more uniform exchange rate. Despite ongoing challenges, Ibrahim believes that the current levels in the parallel market reflect a more realistic pricing of the currency. Looking ahead to the next meeting of the Monetary Policy Committee (MPC), Ibrahim shared expectations of interest rates remaining unchanged. He emphasized the importance of supporting economic growth and key sectors such as manufacturing and healthcare. While predicting stability in interest rates, Ibrahim highlighted the MPC's efforts to manage liquidity in the banking sector. In conclusion, navigating the 'new normal' requires investors in Nigeria to adopt a cautious and strategic approach. By focusing on resilient sectors, short-term investments, and emerging opportunities in telco and e-commerce, investors can position themselves for long-term success in the evolving economic landscape.