LAGOS (Reuters) – Nigeria stocks jumped to a 11-month high on Thursday, driven by gains in banking and cement shares as investors took advantage of the low valuation for some commercial bank shares.
The stock market index rose 2.37 percent to cross 30,197 points, lifted by gains in First Bank Holdings and Dangote Cement.
The banking index rose 1.61 percent amid expectations Africa’s biggest economy would exit recession soon as higher oil revenues stabilize the battered naira.
First Bank Holdings, the parent company of Nigeria’s oldest commercial lender, First Bank, rose 10 percent to 5.83 naira ($0.0185), a level last seen in Oct, 2015.
Dangote Cement, which accounts for a third of the market’s entire capitalisation, also gained 5 percent, trading at 183.75 per share.
Stock brokers said foreign investors who were scared off by the threat of another currency devaluation were considering coming back.
“We are beginning to see the positive impact of the stability in the foreign exchange market and coupled with the attractive valuation of most stocks, offshore investors have started looking toward the stock market,” stock broker Austin Egberi said.
Nigeria said last week it was emerging from recession after data showed its economy shrank 0.52 percent year-on-year in the first quarter, less than the revised contraction of 1.73 percent in the preceding quarter.
Nigeria’s central bank has since February regularly injected dollars into the foreign exchange market to improve liquidity and narrow the spread between official and black market rates.
The local currency has held steady at 382 to the dollar on the black market after dropping earlier to 520. It is trading around 305 level on the official market.
“The market is seen rallying further in the coming days as more investors are attracted to take position,” another stock dealer said.
($1 = 314.50 naira)
(Reporting by Oludare Mayowa; Editing by Larry King)