Nigeria Among Emerging Markets Attracting Big-Money Investors Amid Structural Shift

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LONDON, May 23 – Large global investors are increasingly channeling funds into emerging markets like Nigeria, reflecting a structural shift in investment strategies, according to David Hauner, head of global emerging markets fixed income strategy at Bank of America.

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Hauner revealed that significant global fixed income funds are placing substantial bets in key emerging markets, highlighting a move away from dedicated emerging market funds towards more targeted investments.

Countries with strong growth or reform narratives, such as Mexico, Brazil, Turkey, India, and Poland, are major beneficiaries. Short-term investments in Egypt and Nigeria have also gained popularity among investors.

“I think that is the beginning of a structural story,” Hauner said, emphasizing that investors now prefer specific country exposures over index products that bundle diverse emerging market assets. This shift has led to outflows from traditional emerging market funds while crossover investments are increasing—a phenomenon Hauner described as unprecedented.

The trend suggests investors are rewarding nations implementing challenging reforms like currency devaluations and subsidy cuts to stabilize their economies. This shift in investment patterns contradicts EPFR data showing $5 billion in outflows from emerging market debt funds, excluding China, since the beginning of the year.

Hauner noted that no single data point captures these investments fully. EPFR data primarily reflects exchange-traded and mutual funds with a set mix of emerging markets, often dominated by China. However, as economic fortunes diverge among developing countries, investors are increasingly seeking targeted investments in select markets rather than broad-based funds.

Alejandro Arevalo, head of emerging market debt at Jupiter Asset Management, pointed out that the strong performance of economies like Mexico, India, and Vietnam has made them investor favorites. “Money has been flowing into these countries,” Arevalo said, noting their success in combating inflation and capitalizing on U.S.-China trade tensions.

Hauner highlighted “puzzle pieces” that illustrate the current cash flows, such as Institute of International Finance (IIF) data showing foreigners added about $32.7 billion to their emerging market portfolios in March, marking the fifth consecutive month of net inflows.

The rally in high-yield bonds from Egypt to Pakistan and the market’s absorption of substantial bond issuance from countries like Turkey and Ivory Coast further support the view of increasing inflows.

“This reflects that EMs are growing up and that global debt investors want a fair share of exposure,” Hauner said. “They’re more stable than they used to be and yet they’re offering quite attractive yields.”

Godwin Okafor
Godwin Okaforhttps://naija247news.com
Godwin Okafor is a veteran Financial Journalist, Internet Social Entrepreneur, and the visionary Founder of Naija247news Media Limited. With an extensive career spanning over 16 years in financial journalism, Godwin possesses a wealth of experience that seamlessly bridges both traditional and digital media landscapes. His journey in journalism commenced at Business Day, Nigeria, where he laid the foundation for his prolific career. In 2010, Godwin took a bold step by founding Naija247news Media, a platform that has since become a prominent player in delivering timely and accurate news. Educationally, Godwin Okafor holds a Bachelor's degree in Industrial Relations and Personnel Management from the prestigious Lagos State University, Ojo, Lagos. His commitment to continuous learning led him to the Lagos Business School, where he further honed his skills. Additionally, he is recognized as a Fellow of the University of Pennsylvania, having successfully completed the Wharton Seminar for Business Journalists. Throughout his illustrious career, Godwin has earned acclaim by winning numerous journalism awards, a testament to his dedication to excellence in reporting. Beyond his role as a Financial Journalist, Godwin Okafor wears the hat of the Chairman at Emmerich Resources Limited, the publishing entity behind Naija247news. His visionary leadership has played a pivotal role in shaping the media landscape and establishing Naija247news as a trusted source of information. Godwin Okafor's multifaceted expertise, commitment to journalistic integrity, and leadership in the realm of business journalism underscore his influential presence in both the media and entrepreneurial spheres.

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