Nigerian Stock Makes Gain, After Buhari Won.

BUSINESS

Nigerian stocks surged the most since March 2010, leading gains among world equity markets, after former military ruler Muhammadu Buhari won a vote that marks the first peaceful shift in power since the end of colonial rule in 1960.

The Nigerian Stock Exchange All Share Index rose for a ninth day to extend its longest streak of gains since December 2012. The West African nation’s $500 million of Eurobonds due July 2023 advanced for the 11th day, pushing the yield down to the lowest since Dec. 8, as President Goodluck Jonathan conceded defeat, reducing the threat of post-election violence, which marred previous votes.

“The political risk has certainly decreased,” Thabo Ncalo, a money manager at Stanlib Asset Management Ltd., which oversees about $45 billion and has been adding to its Nigerian holdings, said by phone from Johannesburg. “It bodes well for investing in Nigeria. It boosts the case for coming back into the country.”

Jonathan sent his “best wishes” to Buhari after the vote, bolstering investor confidence as the country contends with a six-year war against the Islamist militant group Boko Haram. Buhari also faces the task of restoring an economy that’s reeling from a 50 percent drop in the price of oil, its main export, since June.

Nigeria’s all-share index jumped 8.4 percent to 34,410.74 by 11:52 a.m. in Lagos, the commercial capital, the most among 93 global measures tracked by Bloomberg. The gauge has gained 18 percent since the start of a nine-day rally, also the world’s largest advance over the period. At the end of February, the gauge was the global laggard for the year.

Cheap Stocks
More than 11 shares gained for every one that fell, paring losses for 2015 to 0.8 percent. Lafarge Africa Plc, a cement company, UAC of Nigeria Plc, which has interests spanning food to real estate, and Stanbic IBTC Holdings Plc, the lender owned by Standard Bank Group Ltd., all rose more than 10 percent on Wednesday. Nigerian equities traded at about 9.3 times estimated 12-month earnings, compared with a multiple of 10 for the MSCI Frontier Markets Index.

“The Nigerian equity market is cheap and part of this cheapness is because the risk premium is high,” Ayodele Salami, the chief investment officer at Duet Asset Management Ltd. in London, said by phone on Tuesday. “The absence of post-election violence will probably give a lot of investors at least some more confidence to start coming back to Nigeria.”

A retired general who lost three previous elections, Buhari pledged on the campaign trail to clamp down on corruption, boost average annual growth to 10 percent and create at least 1 million jobs a year. He won 52.4 percent of votes cast in all 36 states and the Federal Capital Territory in Africa’s biggest oil producer, according to tallies by the electoral authorities.

Enormous Opportunity
Yields on the nation’s Eurobonds declined 19 basis points to 6.01 percent. Rates on the notes on Tuesday dropped below those of Kenya’s $2 billion of debt securities due June 2014 for the first time since Dec. 11. Nigerian dollar debt returned 3.3 percent in March, the most in Africa, the data show. The naira gained 0.1 percent to 199.05 per dollar, paring losses over the past six months to 18 percent.

“The opportunity for positive change with genuinely new leadership is enormous,” Samuel Vecht, who oversees $2.7 billion across five emerging- and frontier-market funds, said in e-mailed comments from London. “Within Nigeria we think the banking sector has tremendous long-term potential and trades at inexpensive relative and absolute valuations.”

Source Abuja Times