The Critical Role of Data and Analytics in Investor Relations and Recapitalisation

Temiloluwa Sobowale

Friday 28th March 2024, the recapitalisation Circular from the CBN dropped and since then everyone in the Banking Industry got busy with strategies to raise the new minimum quota required.

It is very important to note that recapitalisation now needs to be very data driven because every investor locally and globally wants to be sure they will reap their rewards in the future if they invest now. It’s like the popular discounting rate used in the finance world but here machine learning models help issuers have key facts at hand before approaching investors.

It is of note that while businesses can control internal factors like their finance, budgeting, strategy hiring etc econometrics analytics like the ALL share Index, inflation rate, exchange rates, MPR rates.  government policies etc will play a huge role in the success of a business in the future and all this risks have to be forecasted, added to all the internal forecast;  in other to assure investors of great returns in 5-10 years and in the future.

Econometrics factors

If I am investing into your brand now, can you tell me if the banking index has a positive correlation or negative correlation with the ASI, and can you forecast with an accuracy/confidence level of 95% what the All share index will be in 5- 10 years to give me a sense of your countries economic viability and the Banking industry profitability in the future.

Can you also forecast the inflation rates for the next years and tell me inflation won’t affect your business growth. We all know that  MPR is  used as a tool  to control inflation, can you tell me what the MPR rates will be In the future to enable borrowers take money and not default while your bank makes a profit, without depending on foreign exchange gains?.

With exchange rates, if I invest now in Naira, leaving an opportunity to invest in  Dollar denominated asset, can you tell me what the exchange rate will be in 10 years factoring the seasonality circles of 4 years or 8 years( various government start end periods) while removing outliers from the data so that you can accurately predict the trend and show me my gains when I exit back in the base currency which is Dollars.

Finally what is your government resilience index, can you show  me that  regardless of who has been in charge/ going to be in charge, or policies;  you will be resilient(showing  historic data and trend as proof of resilience).

On the share Analytics side.

Every CFO knows that the behaviour of your share price will determine the type of investors that will get drawn to you.

A business with constant uptrend share price will attract investors who think long term, knowing their portfolio will keep appreciating year on year, but a “Spiky” share price will attract short sellers;  who will buy low and sell when it goes up a little and wait again for it to drop, buying the shares again and circle continues.

If investing in your equities, I am hopeful your equities will appreciate year on year building wealth on the long term for me and if I am going in for a few years, I am sure I will make profit selling when I want to exit.

But before that can happen, you need to show me 4 key metrics on your share price for me to make a decision.

1)   What is your share price seasonality like over the last 10 years, this will give me comfort in time when your share price declines, knowing that the Machine learning seasonality analytics has captured this decline and has shown us that the share price will appreciate in the next circle after the decline.

2) What is your trend like, I am not talking about just the visualisation of your share price data, I am talking of turning years of share data into a single trend analytics to aid my investment decision making. The trend analysis is useful because some brands have just started performing well, meanwhile trend analytics will not score the brand as having an uptrend until the spike and outlier become a constant occurrence for a loong period. This trend analysis shows me your true position and the possibilities in the future.

3)   Outlier Analytics- When do you have spikes and drops in share price so that I can edge against them or take advantage of those during my investing period

4)   Share-Volatility analytics- Can you tell me your share volatility is +50% or -50% etc, these insights and analytics will help me plan my worst case, expected case and best case scenario around your future, when investing now.

As we can see, the world has moved on and data and analytics is needed in investor relations and especially during this time of recapitalisation, Issuers need to put the mind if investors at rest, making sure all internal financial forecast details are covered and all external market risk analytics, econometrics and competitive analytics are also covered. Doing this will boost the confidence of investors.

•Temiloluwa Sobowale is the CEO on Intelligent interactive Limited, A Market risk analytics company based in Lagos Nigeria and the co-founder of www.marketintelligence.ng a SAAS equities analytics platform, providing actionable daily market intelligence report to Issuers, Enterprise and Retail investors. He writes from the UK.