Nigerian Stock Index Trades Near Five Month Low on Naira OutlookEmele Onu
Nigerian stocks fell to the lowest level in almost five months as a weaker currency and declining oil price sparked a selloff by foreign investors.
The Nigerian Stock Exchange All-Share Index retreated 1 percent to 39,278.47 at close in the commercial capital, Lagos, lowest since May 21. The naira retreated 0.2 percent to 164.52 per dollar, taking the decline since Oct. 1 to 0.4 percent. Brent crude rose 0.5 percent to $85.48 per barrel after reaching $83.37, the lowest price since November 2010. Nigeria plans to hold presidential elections in February.
“Foreigners are cutting their holdings on pessimism the naira may slip this quarter if the oil price continues to fall,” Mike Nwanolue, an analyst at Lagos-based Greenwich Trust Group Ltd. said by phone. “Local investors are taking profit or selling for cash to prepare for elections.”
Brent crude extended its decline amid speculation Organization for Petroleum Exporting Countries will refrain from eliminating a glut while demand growth slows to the lowest since 2009.
“We see limited scope for a change in the recent downturn should the slide in oil prices continue,” Adewale Okunrinboye, an analyst at Lagos-based Asset & Resource Management Co., said by phone. “With generally weak earnings outlook across sectors and the imminent 2015 elections, there is a reduced prospect for a reversal in the recent bearish trajectory.”
Nigeria’s reserves retreated 9.5 percent this year to $39.5 billion on Oct. 13 as the central bank sold dollars to shore up the naira, which weakened 2.4 percent in 2014.