• Wednesday, February 21, 2024
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BusinessDay

Nigerian stocks up as investors buy into banks

U.S-stocks

Nigerian stocks ended in the black on Friday led by banking shares after news that two foreign investors had bought significant stakes in Ecobank and Union Bank, helping reverse earlier losses recorded this week.

London-listed Atlas Mara, the African investment vehicle of former Barclays boss Bob Diamond, on Friday increased its stake in Union Bank to almost 30 percent with a $270 million investment, boosting sentiment on the Nigerian bourse.

Sub-Saharan Africa’s second-biggest index opened down at a 9-week low on Friday, level last seen on June 20, after shedding almost 1 percent this week before the news.

Late on Thursday, Qatar National Bank (QNB) bought a 12.5 percent stake in Ecobank for about $200 million, its latest purchase in a drive to be the biggest bank in the Middle East and Africa by 2017.

“We have seen half a billion dollars into Nigerian banks from both deals in 24 hours, that adds to positive sentiments… even as we approach elections next year,”

Mid-tier Nigerian lender Union Bank and Africa’s Ecobank each gained 5 percent on Friday, to help lift the broader index up 0.35 percent.

Uncertainty over forthcoming elections and growing security risks hit demand for equities this year, dampening a stock market rally as local fund managers poured cash into government bonds.

With the main index down almost 1 percent this year, after it rallied 47 percent last year, to emerge as one of the best performing African equity markets in 2013.

But election risks has not deterred established frontier market investors attracted to Africa’s biggest economy by the size of its consumer base and valuations, analysts say.

The index of Nigeria’s top ten lenders climbed 1.55 percent on Friday, outperforming broader consumer stocks, which shed 0.54 percent.