The emerging global turmoil manifesting in risky asset sell-off is causing jitters across emerging markets, including Nigeria, where banks are bracing up to raise about N4 trillion in the next two years to increase their minimum paid-up capital.
The week opened with a bloodbath across regions and asset classes. Risky assets such as cryptocurrencies posted double-digit losses just as the stock markets were not spared.
Early mover Asian markets had sent shivers earlier in the day with Nikkei posting 12.4 per cent loss, the highest single daily loss in recent memory. European and American markets followed with losses in the range of two to five per cent losses across both blue-chips and meme stocks.
The extremely volatile digital currency market was not spared. Within 24 hours, the total value of cryptocurrencies fell by over $367 billion. This led to a 15 per cent shave off from Bitcoin, the world’s largest cryptocurrency by market cap, and a 22 per cent decline in Ether
Bitcoin had recorded a loss for the fourth consecutive day, falling below $50,000 for the first time since February, before it recovered to $55,000 as of press time.
More than $1.13 billion in futures market liquidations resulted from the decline in cryptocurrency prices, according to cryptocurrency data company, Coinglass.
Analysts have attributed the sharp decline to investors’ precipitous sell-off as a result of geopolitical unrest, worries about a potential U.S. recession and the worldwide effect of the Yen’s strengthening after the Bank of Japan decided to cut bond purchases and hike interest rates to 0.25 per cent.
Market analysts also believe that the growing tensions between Iran and Israel may be impacting the stability of the global economy and consequently, the cryptocurrency markets.
The cryptocurrency bloodbath is part of the broader jitters in the investment market, which is partly attributed to Warren Buffet’s strategic share sale. Warren Buffett, the renowned investor and CEO of Berkshire Hathaway, has sold a significant portion of his shares stoking fears among investors.
For instance, Berkshire Hathaway reduced its stake in Apple Inc, selling approximately 116 million shares, which equates to a 12.8 per cent reduction. The firm also trimmed its position in Chevron Corp by selling about 3.1 million shares, representing a 2.5 per cent decrease.
Berkshire Hathaway completely exited its position in HP Inc, divesting all its shares and nearly 447,000 shares of Louisiana-Pacific Corp., reducing its stake by 6.3 per cent.
If the sell-off continues, most investors could begin to push their portfolios to dollar assets, which will reduce significantly investment flow to emerging markets, including Nigeria.
