Nigerian Stocks are leading continental peers amid a rebound from heavy losses due to a double whammy of record oil price declines and coronavirus-induced lockdowns that had pushed stocks into a bear market territory.
The Lagos bourse had cut year’s losses to near single digit on Monday, thanks to its stellar performance since April which has seen Nigerian stocks ahead of other African bellwethers.
Nigerian stocks still down -10.78% was ahead of South Africa (-11.49%), Egypt (-26.57%), Kenya (-15.48%) and Morocco (-22.5%) after trading closed in Lagos on Monday.
Read also: BlackRock throws support behind US exchange start-up MEMX
In the last one month, Nigerian stocks have gained 12% compared to South Africa’s 5%, Kenya’s 7%, Morocco’s 2% and Bloomberg’s Africa/middle East tracker which is up 2%.
After a depressing March, Nigerian stocks last month showed resilience in the face of severe disruption to economic activities due to the coronavirus pandemic.
As a result, the domestic bourse in April saw its best performance since January, with local investors as net buyers, taking advantage of cheap valuations in the market and positioning for dividend payments.
Wahab Mustapha, Senior Analyst, Equity Research at Lagos-based Cordros Capital Ltd told Businessday last week that March’s sell-off was overdone and the stock market is in a stronger position “compared to the COVID-19 induced selloff, where we are coming from,” he said.
So far, the market has remained upbeat, recording its longest bull run since January which lasted for nine trading days to Thursday last week.
Despite cheap valuations at a Price to Earnings of 7.48x compared to South Africa’s 13.02x, Egypt’s 8.69x, Kenya’s 8.86x and Morocco’s 17.63x, offshore investors seem to be risk-off towards Nigerian stocks on currency volatility concerns.
In April, Renaissance Capital’s local unit told Bloomberg that offshore investors remain on the sidelines.
NSE’S domestic and offshore investors’ participation data published in May showed the N87.73bn outflow for FPIS versus N34.38 outflows for locals in March while inflows were N22.49bn and N98.31bn respectively. Despite improvements on the NSE, an expected sharp drop in the economy this year (-3.4% by IMF’S estimation) is expected to rub off on stock outlook for the year.
Last year Nigerian stocks fell almost 15% compared to Morocco’s stock market gain of 8.38%, Egypt’s gain of 7.33%, South Africa YTD of around 8% and Kenya decline of 6.33%.
In January, NSE had its best start to a year in more than a decade and some analysts then had predicted around 5% gain for the year.
NSE closed 0.39% lower on Monday.
