Nigerian stocks posted the largest decline in the world last Friday as declining naira led to selloff by foreign investors.
Week-on-week (wow), the stock market lost N643billion from the value of equities listed on the main-board.
The market capi¬talisation of listed equi¬ties which stood high at N13.070trillion at the beginning of trad¬ing last week declined to N12.427trillion at the close of deals on the bourse.
Likewise, the Nigerian Stock Exchange (NSE) All Share Index (ASI) which opened last week at 40,773.50 points declined to 38,767.29 points, indicat¬ing a decline of 5.18 percent or 2,006.21 points in just one week.
Analysts say the de¬cline witnessed in the stock market last week was the biggest weekly de¬cline since June. Dangote Cement plc, the market’s biggest company by capi¬talisation, dropped a fourth day, slipping 0.1 percent to N234.70. Guaranty Trust Bank plc , the largest lender, fell to the lowest level since September 18, retreating 5 percent to N24.73.
“All of these things are causing panic,” Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management Ltd., told Bloomberg. “For an in¬ternational investor, if the currency is going to deval¬uate, it will affect his own returns.”
The naira rebounded Friday after falling a fourth straight day last Thursday to a record low. Stocks, bonds and currencies from developing nations have been sold after the start of stimulus reduction by the Federal Reserve last month. Equities in Nigeria, Africa’s biggest oil produc¬er, fell 6.5 percent this year, compared with a 4.8 per¬cent decline in the MSCI Emerging Markets Index.
Nigeria’s foreign-cur¬rency reserves dropped for a 17th day to $42 billion Thursday. Central bank Deputy Governor Sarah Alade said Friday the reg¬ulator intervened in the market and has enough reserves to keep defending the currency.
“Foreign investors are going risk off,” Yinkere said. “When you consider our own domestic issues where our currency re¬serves haven’t been grow¬ing there is a sense that the safe position people are taking is that they are anticipating some devalu¬ation of the naira.”
The currency of Africa’s biggest oil producer is un¬der pressure amid a global selloff of emerging markets spurred by the Federal Re¬serve’s paring of stimulus. The naira has also been falling since the regulator last month removed the weekly limit of $250,000 that may be sold to a bu¬reau de change. The central bank sells foreign currency at twice-weekly auctions to shore up the naira. The apex bank also sells dollars directly to lenders at irreg¬ular intervals.