Investment Matters

Monday March 25th 2019

Keeping abreast of the markets and investment matters in general is a demanding task. We will endeavour to provide you with interesting, up to date information and opinions on a regular basis. Please feel free to comment on the articles and let us know what you think. We value your opinion. You’re also very welcome to share the articles with your friends, colleagues or clients.

The latest Investment Matters articles are listed below.

What sparked MTN’s share price to crash?

On the week of 27 August, the Central Bank of Nigeria (CBN) wrote to MTN stating that they want dividends totalling $10bn to be paid back. These dividends were allegedly illegally repatriated from MTN Nigeria to MTN Head Office over 10 years since 2007. The CBN alleges that the banks which facilitated the repatriation did so illegally. At this time, the market is not sure of the merit of this claim.

MTN shares fell rapidly on Thursday 30 August, crashing 19.4% to R86.50. By 15:00 on 31 August, MTN shares had appreciated by just over 3%.

What is the exposure within funds managed by Old Mutual?

The equity and multi asset-class funds were invested in MTN equity to varying degrees, depending on the mandate of the fund as shown in the table below:

HOW WILL THIS IMPACT MY CLIENT’S PORTFOLIO?
Old Mutual is completely focused on achieving long-term investment growth and the risk-adjusted valuation of an asset remains the single most important consideration when investing our clients’ savings. The impact of one company’s fall in share price should be limited because the assets are diversified across share and asset classes within each portfolio.

WHAT IS OLD MUTUAL’S VIEW ON MTN GOING FORWARD?
Our investment professionals will continue to do research and stay close to this case to gain clarity and insight into the claims made by the CBN.