NSIA CEO says he favors pharmaceutical and aviation shares
Fund has taken a more cautious stance after U.S. yield spike
The Nigeria Sovereign Investment Authority is dialing back its exposure to U.S. Treasuries and technology stocks, citing concern over soaring yields and expensive valuations for some of the world’s largest firms.
The NSIA, one of Africa’s biggest sovereign wealth funds, is pivoting its holdings to other asset classes that will benefit as economies re-open and global travel picks up, according to Chief Executive Officer Uche Orji.
Meantime, he said NSIA’s Stabilisation Fund has cut its U.S. Treasury exposure to less than 20% and may sell more stocks, which make up about 25% of the portfolio.
“I’m very worried about rising interest rates,” Orji said in an interview on Bloomberg TV. “We were very bullish across most asset classes last year. We’re more cautious now.”
The sovereign wealth chief joins a chorus of investors warning about the consequences of the recent spike in U.S. Treasury yields as well as troubling signs that suggest another tech bubble. Orji said he favors pharmaceutical, aviation and consumer discretionary shares.
The NSIA is also closely watching emerging markets, which helped contribute to the fund’s gains last year.
The Abuja-based wealth fund is planning to raise $900 million to $1 billion of debt to help fund construction of an ammonia plant in southeast Nigeria at the cost of $1.4 billion with partners including OCP Group of Morocco, the CEO said. Equity investors will provide the remaining funding, he said.
“You have a 100% offtake guarantee, so it’s easy to fund a project like that,” Orji said. “We are confident that somewhere in the international market and local market we will be able to raise debt.”