Business
Nigeria stock market surge will continue in 2013
Nigeria’s stock index has surged but remains less than half its value before a 2008 banking crisis.
Analysts say banks, a latecomer to last year’s stock rally, still have room for growth relative to emerging market peers.
For instance, Nigerian lenders are trading on an average price to book ratio of around 1.2 times, and return on equity of 18 percent, compared with the emerging market average of 1.6 times price to book and a return on equity of around 14 percent, an analyst at FBN Capital says. He cites UBA, Diamond Bank and Skye Bank as top picks.
Renaissance Capital equity sales analyst Akinbamidele Akintola expects domestic investors to come back this year, as they recover from having their fingers burned in the crisis.
Last year, domestic investors were 44 percent of volumes on 658.2 billion naira (US$4.2 billion) traded, compared with 33 percent of 634.9 billion naira (US$4 billion) in 2011, Nigeria’s bourse said in January.
At the market peak in 2007, domestic investors were 85 percent of trades, but many pulled out when it tumbled a year later, however, its current performance could draw a lot more of them back.
