Nigeria’s Islamist insurgency, tumbling oil revenue and a looming presidential election have turned the nation’s stocks into Africa’s biggest laggards (Sluggish economy).

The country’s main equity index lost 25 percent this quarter after tumbling to a 22-month low, the continent’s largest retreat. The Nigerian measure dropped to 8.1 times estimated earnings Dec. 11, falling below Zimbabwe [/b]for the first time since Bloomberg started tracking the southern African nation in 2010.

Tension in Africa’s largest economy is escalating before polls in February pitting southern Christian President Goodluck Jonathan against former military ruler Muhammadu Buhari, a northern Muslim, with attacks by the Islamist militant group Boko Haram killing at least 450 people in November.[b] Crude’s plunge below $65 a barrel has deepened the rout as Nigeria needs a price of $126 to balance its budget, more than any other major developing-nation producer bar Venezuela and Bahrain, according to Deutsche Bank AG.

“The government situation is somewhat chaotic,” Mark Mobius, who oversees about $40 billion as the executive chairman of Templeton Emerging Markets Group, said by phone from Bangkok on Dec. 9. “You’re going to get a lot of hesitation on the part of investors” until after the polls, he said.

The Nigerian Stock Exchange All Share Index (NGSEINDX) decreased 1 percent to 30,763.38 in Lagos, the lowest level since January 2013. The gauge, which has dropped almost 30 percent from this year’s high in July, fell 7.4 percent this week, the worst five-day decline since the week through Nov. 7. Its fall is the fourth-biggest among 93 stock gauges tracked by Bloomberg worldwide this quarter through Dec. 11.

Dangote Tumbles

The last time Nigeria held general elections in 2011, stocks declined 1 percent in the six months before the April poll and ended the year 16 percent down. Jonathan’s victory triggered riots across the north that killed more than 800 people and led to the burning of churches, mosques and homes and was challenged by the runner-up.

Investors are more concerned this year as increased attacks by Boko Haram “make these elections particularly fraught,” Nnamdi Obasi, a senior analyst for West Africa at Brussels-based International Crisis Group, a conflict resolution organization, said in a report last month.

Consumer and energy shares have been among the biggest drags on the benchmark index. Dangote Cement Plc, controlled by the continent’s richest man, Aliko Dangote, has dropped 27 percent this year. The stock makes up about a quarter of the gauge’s $58 billion market capitalization. FBN Holdings Plc, owner of the country’s biggest lender, fell 47 percent amid higher capital requirements.

Extreme Selloff

The estimated price-to-earnings ratio for Nigeria is the lowest of nine of the largest markets in sub-Saharan Africa and compares with 8.14 times for the main measure of the stock exchange in Zimbabwe, where a decade-long recession that began in 2000 reduced the size of the economy by half.

Kenya’s Nairobi All Share Index is valued at 11.4, while Russia’s Micex Index is at 4.6 times estimated earnings as the economy teeters on recession amid international sanctions against the world’s biggest energy exporter. Brazil’s Ibovespa Index is valued at 10.3, while the MSCI Frontier Markets Index measures 9.1.

The selloff in some consumer stocks and banks has been extreme even after accounting for a more difficult business environment amid lower oil prices, Joseph Rohm, who helps manage about $2 billion in Africa for Investec Asset Management, said by phone from Cape Town Dec. 10. “It’s a better environment now for stock-pickers with a long-term horizon.”

Nigerian securities will rebound in 2015 if the political environment improves, Mobius said. The $1.8 billion Templeton Frontier Markets Fund (TFMAX) hasn’t reduced its exposure to Nigeria during the recent downturn, he said.

Not Buying

The latest data from Nigeria’s stock exchange show foreign investors have been net sellers of the nation’s shares and bonds on the whole. They pulled $273 million from the country in October, the most since February when central bank Governor Lamido Sanusi was suspended.

[/b]Oliver Bell, a money manager at T. Rowe Price Group Inc. in London, said last month that the firm’s Africa and Middle East fund has cut holdings of Nigerian shares to the lowest level since the fund’s inception in 2007, even as he predicts the country’s long-term investment case will stay intact.

[b]“We’re not seeing this as a buying opportunity at all,” David Wickham, director of frontier and emerging-market equity at HSBC Global Asset Management, which has $850 million in frontier market shares, said by phone from London Dec. 10. “It’s a pretty challenging period. Most investors, unless they’re extremely contrarian, will sit back and wait.” (Guess they are waiting for the exit of GEJ)

Slower Growth

Jonathan is weakened by the clear lack of thought and ways of ending Boko Haram’s Islamist attacks along with his administration’s failure to curtail corruption and by senior party member defections to the opposition, Sebastian Spio-Garbrah, managing director at New York-based consultancy DaMina Advisors LLP, said last month.

Nigeria’s economy, which relies on oil for more than 90 percent of exports and 70 percent of government revenue, is getting buffeted by Brent crude’s more than 40 percent plunge since June to the lowest level in more than five years. The finance ministry, which had projected 6.35 percent economic growth in 2015, may reduce that forecast by about one percentage point next week, spokesman Paul Nwabuikwu said by phone Dec. 10 from the capital, Abuja.

The central bank raised interest rates to a record 13 percent last month in a bid to stem capital outflows and defend the local currency, which dropped to a record low against the dollar on Dec. 2 and is heading for its biggest annual decline since 2008. The naira rose 0.7 percent to 180.15 per dollar, paring losses this quarter to 9.1 percent.

“In the next 30 years, it’s a fantastic place to be,” said HSBC’s Wickham. “Right now, it’s a different story.”


http://www.bloomberg.com/news/2014-12-12/nigeria-sinks-below-zimbabwe-stock-valuations-on-oil-rout.html

when your Nations economy is been compared and is even doing worst than Zimbabwe, then you ought to do more than pray and hope for positives in a government that seems to lack the idea or technical adequacy of stemming the flow of bad economic indexes prevailing the Nation.

We had 5 solid years of good Oil sales but it was fretted away on wastefulness and outright stealing.

Our President was busy buying Presidential Jets and Helicopters, Building Palatial Guest houses for himself and his deputy, eating a billion naira food in the Villa and travelling with the largest entourage to all United Nations and African Union events.


Pity when the reality of the useless and unplanning ways of doing things finally turn up in our faces, Ordinary Nigerians are the ones made to pay for the mismanagement of the Ruling Party.

Who would still prefer we retain GEJ in Aso Rock? Can't believe some people still see sense in this government.

Sai Buhari 2015

I think we need another person to run this nation. No ethnic sentiments, GEJ should step up or be kicked out.

saintneo:
I think we need another person to run this nation. No ethnic sentiments, GEJ should step up or be kicked out.

Step up? After 5years of not doing so?

A Yoruba proverb says " if you use a year to prepare for madness then how long will the real madness take"

GEJ ain't stepping anywhere else than Otuoke next year.

pendy79:


Step up? After 5years of not doing so?

A Yoruba proverb says " if you use a year to prepare for madness then how long will the real madness take"

GEJ ain't stepping anywhere else than Otuoke next year.

True words!

I had much tougher words but I had to be civil.


I have always supported GEJ but all I see is a wasteful government, a government without plan and direction. Even NOI is a disgrace as a finance minister but I will stop here for now.

what a fresh air

holatin:
what a fresh air

It is a stinking and rotten air.

pendy79:


It is a stinking and rotten air.

thank God you know

very funny analysis well the funny aspect of the whole thing is that apc can only win presidencial in the net, on till then keep dreaming.

And president Ngozi okonjo iweala(one of the five presidents of Nigeria) want us to believe all is well. This is what you get when u pick a woman to help you work and she suddenly turn d boss and seen as a genius by the clueless president.

Leboska:
very funny analysis well the funny aspect of the whole thing is that apc can only win presidencial in the net, on till then keep dreaming.

u jst have to know that gej is gone already.

Caseless:
And president Ngozi okonjo iweala(one of the five presidents of Nigeria) want us to believe all is well. This is what you get when u pick a woman to help you work and she suddenly turn d boss and seen as a genius by the clueless president.

She has done more harm than good to the Nigerian Economy with her blindness and cover-up to the clear stealing going down during her watch.

A good sound and reasonable finance minister will see sense in the noise Sanusi was making early this year and act in the national interest but no our own finance minister supported the cabal and the economic thieves.

I'm sure all Nigerians know why Nigeria is in deep financial crisis.

pendy79:


She has done more harm than good to the Nigerian Economy with her blindness and cover-up to the clear stealing going down during her watch.

A good sound and reasonable finance minister will see sense in the noise Sanusi was making early this year and act in the national interest but no our own finance minister supported the cabal and the economic thieves.

I'm sure all Nigerians know why Nigeria is in deep financial crisis.

Gej told us that $20billio can't be missing, if it does, our economy will collapse. Now that our economy is 'collapsing', i'm sure it is enough evidence that that $20billion is actually missing. Okojo iweala killed our economy.

Caseless:
Gej told us that $20billio can't be missing, if it does, our economy will collapse. Now that our economy is 'collapsing', i'm sure it is enough evidence that that $20billion is actually missing. Okojo iweala killed our economy.

You're so on point and the reality is dawning on Nigerians on the evil this cabal has caused the Nation.

I seriously hope Nigerians have learnt their lesson with this GEJ experiment of 2011.

Our economy cannot last another four years under this kleptomaniac and clueless person called Goatluck.

Nigeria&Nigerians should never be in this plight of economic retrogression.

pendy79:


You're so on point and the reality is dawning on Nigerians on the evil this cabal has caused the Nation.

u can now see why gej and his cohorts should b confined to one dark prison after he(gej) is pushed out next year.

Caseless:
u can now see why gej and his cohorts should b confined to one dark prison after he(gej) is pushed out next year.

Not just prison bro but made to account for every stolen, misappropriated and diverted funds taken from our commonwealth.

GEJ and his gang need to repay all monies fretted away from our treasury after which they can go anywhere they want to.

Why are we now been mocked everywhere by these countries

pendy79:


Not just prison bro but made to account for every stolen, misappropriated and diverted funds taken from our commonwealth.

GEJ and his gang need to repay all monies fretted away from our treasury after which they can go anywhere they want to.

gej must pay for causing us pains- Nigeria is bleeding in his name.