Bargain Hunters Pounce as Nigeria Stocks Rise for Eighth Day

Nigeria’s stocks rose in the longest winning streak since July 2013 as investors bought shares they deemed oversold following declines spurred by concern lower oil prices and elections will hurt the economy.

“Bargain-hunters are taking advantage of the low price of a number of stocks,” Ikechukwu Iheanacho, who helps manage about 6 billion naira ($30 million) of equities and bonds at Chapel Hill Denham Securities Ltd., said by phone from Lagos. “They have suffered far beyond what the fundamentals would suggest, largely on the back of oil and foreign investors coming out of the market ahead of the elections.”

The Nigerian Stock Exchange All Share Index rose 0.2 percent to 30,195.56 by the close, extending its eight-day gain to 9.5 percent. Stock prices fell to 7.2 times estimated earnings on Feb. 13, the lowest in Africa and below the MSCI Frontier Markets Index multiple of 9.9. Valuations rebounded to 8 times predicted earnings for the next 12 months on Wednesday.

Nigeria, which derives 90 percent of export earnings and 70 percent of government revenue from oil, has been battered by the almost 50 percent collpase in crude prices since June. The naira has depreciated 19 percent against the dollar in the past six months, more than any of the other 23 African currencies tracked by Bloomberg.

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Political tensions in the nation have intensified after presidential elections expected to be the closest in 16 years were delayed until March 28.

Guaranty Trust Bank Plc, the biggest bank by market value, has climbed the most in the past eight days, rising 36 percent. FBN Holdings Plc, which owns Nigeria’s largest lender by assets, First Bank, is up 22 percent. Zenith Bank Plc has increased 20 percent in the period.

GT Bank and Zenith are “some of our favorite shares,” Iheanacho said. “They are among the banks that have the greatest propensity to weather the storm.”

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