Managing Director of investment firm STANLIB says investments in dollar-linked portfolios and properties is a smart way to mitigate the effect of the falling cedi.
According to Mr. Emmanuel Alex Asiedu, properties tend to do well even during local currency depreciation against major trading currencies.
“Properties to tend to move positively with currency, especially a currency like the dollar. For example if you buy a house the value is not going to depreciate in cedis, the value goes up”, he explained.
He said although some investors might want to hoard the dollar in a bid to make gains at a later date, investments in properties is equally a good strategy.
“What we recommend is that, if you have flows that are linked to the dollar, you might as well look at investments that have that correlation with the dollar”, he said.
Mr Asiedu was speaking to journalists after the Annual General Meeting of STANLIB, previously Stanbic Investment Management Services (SIMS).
The British Pound and Euro hit seven and five cedis respectively last week at some forex bureaus across the country. The British pound started the year (2015) at five cedis across forex bureaus in the country while the Euro started at 3 cedis, 90 pesewas.
The Pound and Euro are not the only major foreign currencies thrashing the cedi on the forex market.
The dollar last month hit four cedis after rallying between 3 cedis 80 and 3 cedi 90 pesewas for weeks and is now being sold at 4 cedis 45 pesewas in forex bureaus.
The STANLIB MD however said his outlook for the cedi’s stabilization was mixed, citing a lack of fiscal challenges and speculation elements for his projection.
He was hopeful that in flows of proceeds from cocoa in September could stabilize the local currency, noting, however, that it might not be significant.
“What we are seeing is that there is also a bit of a speculative element [causing the cedi fall]. If you are afraid that the cedi will lose against the dollar you tend to buy dollars and hold although it might not be informed by fundamentals. So I think that when cocoa proceeds come in, that speculative element will be stripped off and we will see the real value of the cedi…but I think that we still will have some slight depreciation”, he said.
At the AGM, it was revealed that the Stanbic Income Fund Trust, one the flagship investment portfolios of STANLIB, made major gains within the year under review.
Driven by incomes from interests on Corporate Bonds, the Trust closed 2014 with GHC1, 618,126 representing a 72% gain on 2013 figures.
The share value of the Fund also doubled within the same period.
A resolution to change the name of the Fund from Stanbic Income Fund Trust to STANLIB Income Fund Trust was carried through at the AGM.
STANLIB is a wholly-owned subsidiary of Liberty Holdings Ltd, South Africa.
Source: Myjoyonline