NGE - NGE: Nigerian Equities Could Rise But Upside Is Capped

• Nigerian equities are not especially exciting from a U.S. investor's perspective.
• NGE is a fund that enables U.S. investors to access the Nigerian equity market, but this market is nevertheless undeveloped.
• With only 20 holdings (little diversification), and with higher local "risk-free rates", and a necessarily larger equity risk premium, NGE is not easily able to grow into larger earnings-based valuations.
• Even if we price in longer-term earnings growth expectations, upside is probably capped even in a sanguine scenario (also assuming no FX risk).
• Nigeria's long-term economic prospects are quite exciting, but I would not recommend NGE to a public equity investor.

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