Nigerian stocks rallied the most in the world this week, advancing for five straight days, as local buyers took advantage of lower prices following the index’s slump to an 18-month low.
The Nigeria Stock Exchange All Share Index (NGSEINDX) climbed 2.5 percent, extending gains this week to 6.5 percent, the biggest increase since March 2010. Consumer stocks were among the main gainers as Unilever Nigeria Plc rose 26 percent and Cadbury Nigeria Plc added 34 percent. Ikeja Hotel Plc was up 46 percent in the biggest advance of the five days. The naira strengthened the first time in four days, paring its worst week since July 2009.
Foreigners sold Nigerian stocks as the price of crude dropped into a bear market and the country’s central bank eroded the reserves of Africa’s biggest oil producer to support the naira, which fell to a record low against the dollar this week. The lower stock prices proved to be buying opportunities for domestic investors, according to Ikechukwu Iheanacho, an analyst in Lagos at Chapel Hill Denham Securities Ltd.
“Local investors see good opportunities and have taken them up,” he said by phone today. They’re “tapping into the attractive re-entry point,” Iheanacho said.
The one-week rally pared the bourse’s 2014 loss to 14 percent. While local investors were enticed by the deals, foreigners will probably stay out until after elections are held in February and oil prices stabilize, Iheanacho said.
The naira gained 0.6 percent to 171.15 per dollar by 4:54 p.m. in Lagos. It’s still set for a loss of 3.3 percent this week.
“Pressure on the central bank and it’s ability to defend the naira will remain,” he said. “All pointers indicate that we’ll have some headwinds.”