Nigerian stocks rally, cross psychological 70,000 level for first time

By Chijioke Ohuocha

ABUJA (Reuters) -Nigeria’s share index crossed a psychological threshold of 70,000 points for the first time on Wednesday after stocks gained for the third straight session, Refinitiv data showed.

The All Share Index climbed 1.94% to close at 70,581 points for the first time ever.

Nigerian equities started to rally at the end of May, when new President Bola Tinubu launched reforms to the country’s foreign exchange market and scrapped a costly but popular fuel subsidy that had sucked up government finances.

Stocks have gained 35% since May as local funds have piled back into equities. Double-digit inflation has also supported the shift to equities as yields on the fixed income market turn negative in real terms.

Banking stocks, which rose to a 20-year high in June, have led the charge following the reforms.

Foreign investors have stayed on the sidelines despite the recent rally due to currency issues.

Nigeria has faced dollar shortages after investors exited local assets during a period of low oil prices. Investors are yet to return and the central bank has not yet settled outstanding demand for dollars from investors seeking to repatriate funds or airlines seeking to send money from ticket sales abroad.

“Nigeria now ranks highest on our risk-reward scorecard due to elevated carry, however we remain on the sidelines waiting for better line of sight on FX inflows and more consistent liquidity tightening measures,” JP Morgan analyst Ayomide Mejabi wrote in a note.

The central bank held its second treasury bill auction of the year this week, pushing the one-year treasury yield up to 21.2% from 17% at a previous auction in August, the JP Morgan analyst said.

(Reporting by Chijioke Ohuocha; Editing by Josie Kao and Christina Fincher)