Stocks fell the most in the country last year since 2009 on delays in implementing banking reforms, increased instability, and Europe’s debt crisis combined to sap demand for emerging-market assets.
The Nigerian Stock Exchange All-Share Index, according to Bloomberg News, fell as much as 0.9 per cent before paring its losses to 0.3 per cent at 20,729.42 by the end of trading in Lagos.
Nigeria’s benchmark measure gained 19 per cent in 2010, making it the best performer in sub-Saharan Africa after Kenya’s gauge, which rallied 34 per cent. Since then, there have been several bombing attacks in the country, including one on Christmas Day that killed at least 43 people near the capital, Abuja.
Increasing security issues in Nigeria, delays in the conclusion of banking reforms begun in 2009 and the prolonged sovereign-debt crises in Europe whittled investors’ appetite for the country’s assets, leading to the decline this year, Abiola Razaq, an analyst with Lagos-based Vetiva, said on phone.
The decline “is contrary to our expectations for the year,” he said. Vetiva expected a passage of the Petroleum Industry Bill, which seeks to reform the country’s oil and gas industry and attract foreign investment into the nation, but this is yet to happen, he said.
Vetiva expects “a positive 2012,” driven by low valuations, Razaq said. The Bloomberg Banking Index, which tracks the performance of the 10 most capitalised banks, fell 32 per cent last year.
“Foreign investors will appreciate that the risks in emerging markets are not as bad as is being thought,” he said. In 2012, there will be a repricing of risks in emerging markets, including Nigeria, he said.
Stock index in worst fall since 2009