Stocks Hit 33-month High On Foreign Fund Buying

Nigerian stocks hit a 33-month high on Tuesday as foreign investors bought shares following improved liquidity on the currency market and a strong half-year performance by listed companies.
Nigerian assets, largely shunned by foreign investors over the past three years, are back on their radar thanks to a drop in valuations and improved visibility on exchange rates.
The all share index climbed 1.26 per cent, its sixth day of gains to reach 37,999 points, a level it lasted touched on Oct. 29, 2014.
The equity market has benefitted from the recovery in liquidity on the currency market with the introduction four months ago of a new window for investors to trade the naira at market-determined rates.
Several medium-sized listed companies, which supply services to larger ones, have announced increases in half-year profits signaling that Nigeria’s economy was recovering from its second year of recession.
Aviation services firm NAHCO, which gained 10 per cent, on Tuesday said its half-year pre-tax profit rose 63 per cent to 203.1 million.
“The market is back. We still believe only about 25 per cent of our frontier Africa clients have added to Nigeria since the introduction of the (investor) foreign exchange (forex) market,” said Akinbamidele Akintola, equity sales manager at Stanbic stockbrokers.
But he added that multiple exchange rates and political risk as the country gets halfway its presidential term could slow foreign interest.
Two weeks ago, the stock market posted its longest winning streak in more than two years after sixteen straight gains.
The central bank in April liberalised the naira for foreign investors, a move intended to improve dollar supply. But that introduced another exchange rate, and Nigeria now has at least six, which the bank has used to mask pressure on the naira.
Dollars have been in short supply in Nigeria since the price of crude oil, the country’s main source of hard currency, plunged mid-2014, triggering a currency crisis, an exodus of foreign investors and its first recession in 25-years.
But investors have been importing capital again to buy Nigerian assets, which have slumped along with the oil price and falls in the value of the naira currency.
Stocks rose across the board on Wednesday with 31 companies advancing and 20 firms declining. Guinness Nigeria and Dangote Flour both top the gainers, raising the maximum 10 percent allowed on the bourse.
Other gainers include Nestle up 8.96 per cent, Nigerian Breweries, five per cent and Cadbury 4.92 per cent.
© Reuters

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