Comercio Partners, an investment banking firm, has called on investors to diversify their portfolios for protection against the risks of inflation.
Report analysing the October inflation report and implications, Co-Founder, Comercio Partners, Tosin Osunkoya noted, “Although there is a slowdown in the pace of growth compared to September and August, the double-digit inflation persists, posing significant challenges for Nigeria’s population across various socio-economic strata.
Data from the National Bureau of Statistics, NBS showed that the headline inflation rate rose for the 10th consecutive month to 27.33 per cent in October from 26.72 per cent in September.
“Navigating the current economic landscape in Nigeria requires a cautious approach from investors, considering the multifaceted implications of inflation on various asset classes. Additionally, policymakers need to maintain a vigilant stance, ensuring that monetary policies are adaptive to the evolving economic conditions.
”Osunkoya recommended to investors interest rate sensitivity, diversification and hedging as measures to protect their portfolio from inflation risks
“Investors should consider diversifying their portfolios to mitigate risks associated with inflation. Assets like real estate, commodities, and international investments could provide a hedge against the impact of inflation on domestic assets. He said
He further noted that the rise in the inflation rate implies continued monetary tightening by the Central Bank of Nigeria (CBN) as well as a need for clear and transparent communication by the apex bank.
“The continued effort to mop up excess liquidity in the market is expected to be a key element of the monetary policy. This is aimed at controlling inflation by reducing the money supply. The new CBN governor’s communication strategy will be crucial. Clear and transparent communication regarding monetary policy intentions and strategies can help manage expectations in the financial markets and among the public,” he said.
