News / Africa

Nigeria's Stock Market Up More Than 20 Percent Since January

Foreign investors boost liquidity in one of world's best-performing emerging markets

TEXT SIZE - +

Nigeria's stock market is up more than 20 percent this year on stronger-than-expected corporate earnings and renewed foreign investment.

The west African nation once again has one of the world's best-performing emerging markets as foreign investors are boosting liquidity and keeping the value of the Naira steady.

With comparable emerging-market economies showing just a six percent gain so far this year, Nigeria's stock market has rallied more than 20 percent since January, with average daily volumes up 76 percent against a year ago on trading of about $20 million dollars.

The return of investor confidence following last year's huge bailout of failing banks has focused mainly on blue-chip savings institutions and manufacturers of consumer goods, including United Bank for Africa, Zenith Bank, Nigeria Breweries and Flour Mills Nigeria.

Kayode Akindele is a director for the Lagos-based financial advisor Greengate Strategic Partners.

"We've seen some international portfolios from abroad coming back from the market.  Managers see value in the market at the moment and they are taking positions either in the banking sector or food and beverage sector, especially because of the early results of these companies have been pretty good considering the economic slow down.  I think the second thing we are seeing is that the money markets rates have collapsed really in Nigeria," Akindele said.

Thirty-day money market rates are down from 18 percent in December of 2009 to  just two percent today. That is driving investors back into stocks.

Nigeria's banking sector accounts for nearly two-thirds of the stock market, so analysts are watching closely as Abuja moves toward recapitalizing rescued banks.  Banking sector reforms may also include limiting capital market lending to a proportion of the bank's balance sheet and prohibiting banks from using depositors' funds for proprietary trading or venture capital investments.

Akindele says the key to keeping Nigeria's stock market rally going is keeping these reforms on track.

"Whatever happens in the baking sector will really drive the rest of the market. So, I think in reality, it is really what happens to the banking reforms.  Can the rescued banks be recapitalized?  Can they get back on the path of growth?  I mean the Quarter 1 results from three banks released which are First Bank, GTB and Zenith are showing that earnings are back, that profitability seems to be back up and the market is improving for at least those institutions," Akindele said.

This stock market rally is all the more remarkable when you consider the political uncertainty about elections next year,  renewed violence in the city of Jos and the health of President Umaru Yar'Adua.  Investors say the sustained performance of Nigerian stocks is testimony to the leadership demonstrated so far by Acting President Goodluck Jonathan, who has named a former managing director for Goldman Sachs as Nigeria's new finance minister.

You May Like

'Exceptionally Lucky' US Boy Survives Flight in Wheel Well

The boy was unconscious for most of the flight, and appeared to be unharmed after enduring the extremely cold temperatures and lack of oxygen More

US Anti-Corruption Law Snags Major Tech Company

The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter in December, 1977 More

Cameron Criticized for Calling UK 'Christian Country'

Letter from scientists, academics and writers says the prime minister is fostering division by repeatedly referring to England as a 'Christian country' More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid