Question

QUESTION 1 Critically do an Impact analysis of C0V1D-19 (Corona Virus) on Derivatives Investments (Dl) in Namibia and formulate a Business plan post COVID-19 (next 7 months) with the aim of achieving 6 main Investment objectives for Dl?

Answer 1

The coronavirus pandemic has affected almost all the sectors of the world and the investment market is also affected by this. The coronavirus outbreak attacked most of the countries in the late march which is the closing of the current financial year of 2019-20 and the start of the new financial year 2020-21. During the start of the financial year, most of the countries in the world have gone through the phase of lockdown and this has put the hold on the economic development of almost all the countries around the globe. The same happens with Namibia also.

Derivatives can be understood as the financial instrument that has an underlying asset on which the value of the derivatives is based. The value os derivatives are also affected by the lockdown imposed amid coronavirus outbreak. Namibia is also facing an economic crisis due to COVID-19 and the economy has reached the lowest level after the independence of the country in the year 1991. This itself represents that the economy of Namibia is going to a financial crunch and this will impact the value of the derivatives too.

Namibia must focus on a few things to stabilize the economy and aim of achieving the investment objectives of the derivative instruments. The first thing is that the government must make the liquidity in the derivatives market. This will help in the stabilization of the economy and making the market volatile.

The value os assets must also be ascertained and their liquidity must be checked so that they can be used in design with the critical situation. Tax exemptions must also be included so that the derivatives market can flourish post the coronavirus impact. The trading must also be done judiciously so that less loss is ascertained. In this way we can achieve the aim of investment objectives of DI.