Paul Wallace Lagos
NIGERIAN equities rose to a two-week high as isolated incidents of violence spurred investors to take advantage of the cheapest stocks in Africa before final results from presidential and legislative elections are tallied.
The advance extended gains over the past seven days to 4.8 percent, taking the Nigerian Stock Exchange all share index to its best level since March 16. The measure is still down almost 12 percent this quarter, the most among 24 African gauges tracked by Bloomberg. It is trading at 9.3 times estimated earnings, the lowest on the continent after Zimbabwe.
Investors encouraged by the lack of violence were taking “early positions” should prices rise, said Ayodeji Ebo, head of research at Afrinvest West Africa in Lagos.
“They are cautious, they’re not being very aggressive. But they’re trying to increase their exposure, knowing that if there’s no post-election violence the only direction for the market will be upwards.”
The election, a key test of stability in Africa’s largest oil producer, pitted President Goodluck Jonathan against a united opposition led by former military ruler Muhammadu Buhari. This weekend’s vote took place against the backdrop of a six-year insurgency waged by the Islamist militant group, Boko Haram, and a plunge in the price of oil, the country’s main export, which has slowed growth in Africa’s largest economy and weakened the currency.
At least 43 people were killed in violent incidents on Saturday, according to data from the Situation Room, a coalition of civil-society groups monitoring the election.
The naira weakened 0.2 percent to 199.50 a dollar before erasing losses to trade unchanged at 199.05 as of 11:30am in Lagos yesterday. Yields on the nation’s $500 million (R6 billon) of Eurobonds due July 2023 fell 3 basis points to 6.48 percent, the lowest since December 11.
With a more than 50 percent slump since June in prices for oil, which provides two-thirds of government revenue and 90 percent of foreign income, the naira has lost 18 percent against the dollar in the past six months, the steepest decline among 24 African currencies. Bloomberg page 28