Nigerian Stocks Climb Most Worldwide, Defying Global Selloff, on Debt Bill

Nigerian stocks climbed to a two-week high, sending the benchmark index to the biggest gain worldwide, as the approval of a company to buy bad bank debt outweighed concern over the worsening global debt crisis.

The 213-member Nigerian Stock Exchange All Share index increased 1.4 percent to 27,503.36 at the close in the commercial capital, Lagos, the strongest since April 21.

Nigerian banks amassed toxic assets of about $10 billion dollars through so-called margin loans given to speculators to buy shares on the local bourse, Eurasia Group estimated a year ago. The central bank bailed out 10 lenders with an injection of 620 billion naira ($4.1 billion).

The bill, approved yesterday, will create an asset management company that will be partially funded through the sale of 10-year bonds guaranteed by the Finance Ministry, Governor Lamido Sanusi said yesterday.

The bill’s authorization is a “major boost” to investor confidence, Razaq Ahmed, a Lagos-based analyst at Meristem Securities Ltd., said by phone today.

Oceanic Bank Plc, one of Nigeria’s rescued lenders, rose to a three-week high, climbing 4 percent to 2.06 naira. Spring Bank Plc rallied 4.1 percent to 1.02 naira. Afribank Nigeria Plc advanced 12 kobo, or 5 percent, to 2.52 naira, the highest since April 23. Intercontinental Bank Plc and Finbank Plc also increased. Nigerian Breweries Plc, the biggest company by market value, led gains, climbing 2.5 percent to its highest level in almost six years. First Bank of Nigeria Plc and Zenith Bank Plc, the West African nation’s biggest lenders, also advanced.

‘Risk Reduced’

Nigeria’s stock exchange closed yesterday following the death of Nigerian President Umaru Yar’Adua, 58, on May 5 following a long illness. Goodluck Jonathan, 52, who has been acting president of Africa’s most populous nation since February, was sworn in as president yesterday.

With Jonathan’s inauguration, any “perceived leadership vacuum is no longer there, and that has reduced the level of political risk of the country,” Ahmed said. “This is a positive development.”

Nigerian stocks will rise 50 percent this year, including a 32 percent gain so far in 2009, boosted by the asset management company and by an increase in state spending following budget approval, according to Renaissance Capital said this week.

The index has outperformed a 7.1 percent gain in the Morgan Stanley Frontier Markets index over the same period. The All Share gauge slumped 34 percent in 2009, the world’s second- worst performer in 2009 after Ghana’s benchmark index.

To contact the reporter on this story: Vincent Nwanma in Lagos via Johannesburg on vnwanma@bloomberg.net.