Nigeria\u2019s stocks fell to their lowest level in almost three years as
\nforeigners exited the market amid fading hopes that President Muhammadu
\nBuhari\u2019s government can revive an economy growing at its slowest pace this
\ncentury.<\/p>\n
The Nigerian Stock Exchange All Share Index dropped 0.8 percent to
\n27,385.69 at close in the commercial capital of Lagos, the lowest since
\nDecember 2012. The gauge declined on all but three trading days in
\nNovember for a monthly drop of 6.2 percent.<\/p>\n
\u201cThe government has not come up with a definitive policy for the economy,\u201d
\nPabina Yinkere, an analyst at Vetiva Capital Management Ltd., said by
\nphone from Lagos. \u201cThe continued lack of clarity is affecting the stock
\nmarket.\u201d<\/p>\n
While Buhari, a 72-year-old former general who came to power in May, has
\nprioritized stamping out corruption in Africa\u2019s biggest economy and oil
\nproducer, investors were irked by a delay of more than five months in
\nforming a cabinet, which he swore in Nov. 11. There\u2019s also concern that
\nhis support for the central bank\u2019s currency-trading restrictions are
\nchoking businesses of the dollars they need to pay foreign suppliers.<\/p>\n
Almost two stocks declined for every one that rose. Guaranty Trust Bank
\nPlc, the nation\u2019s biggest lender by market capitalization, dropped 2.7
\npercent to 20 naira ($0.10). The stock is down 21 percent this year, about
\nthe same as the overall index. That\u2019s the biggest fall in sub-Saharan
\nAfrica after the Zimbabwe Industrial Index.<\/p>\n
Specialist African funds including Alquity Investment Management Ltd. and
\nDuet Asset Management Ltd. have lowered their Nigerian exposure because
\nthey think that central bank Governor Godwin Emefiele will be forced to
\ndevalue the naira, which would cause losses on holdings in
\nforeign-currency terms. Last week\u2019s interest rate cut by the central bank,
\nits first in six years, will heap more pressure on the currency, according
\nto David McIlroy, Alquity\u2019s chief investment officer.<\/p>\n
The naira was unchanged at 199.05 per dollar and has been all but fixed at
\n198 to 199 since early March. Forward prices suggest it will weaken to
\n241.25 in a year.<\/p>\n
Pressure on Currency<\/p>\n
\u201cThe surprise reduction in rates has probably worried international
\ninvestors even more,\u201d McIlroy said by phone from London. \u201cGiven the
\ninflation rate is above the central bank\u2019s target, there\u2019s pressure on the
\ncurrency and they need to attract foreign capital, you\u2019d expect interest
\nrates to be rising.\u201d<\/p>\n
Annual inflation was 9.3 percent in October, higher than the central
\nbank\u2019s target of 6 percent to 9 percent.<\/p>\n
Alquity held about seven Nigerian stocks at the beginning of 2015,
\nincluding Guaranty Trust Bank and Zenith Bank Plc. It now holds only
\nDangote Cement Plc. Equity funds are more underweight in Nigeria than any
\nother frontier and emerging market, except for Kuwait and Morocco,
\nanalysts at Renaissance Capital Ltd. said in a Nov. 23 note to clients.<\/p>\n
\u201cWe\u2019ve increased our positions in Egypt and Kenya at the expense of
\nNigeria,\u201d McIlroy said.<\/p>\n
Nigeria is reeling from crude prices that have plunged 57 percent since
\nJune 2014. Economic growth will slow to 3.2 percent this year from 6.3
\npercent in 2014, according to a Bloomberg survey of economists. That would
\nbe the slowest pace since 1999.<\/p>\n
Bloomberg<\/p>\n","protected":false},"excerpt":{"rendered":"
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