By Agency Reporter

Thursday, 9 Dec 2010

Nigerian banks and some Abu Dhabi-based lenders are key stock picks for 2011, managers at HSBC Global Asset Management‘s New Frontiers fund have said.

The Nigerian government has created the Asset Management Corporation of Nigeria to take on bad loans from the nine institutions it rescued under a $4bn bail-out last year and a number of banks are already returning to profit. 

”Now, we see an interesting opportunity in the banking sector. You have got some banks in the stock market that are trading below book value, some are between one and two times, with return on equity that are recovering,” Reuters quoted a manager at the fund, Mr. Andrew Brudenell, as saying.

”There has been a significant clearing out of the loan book of the banks and the better banks have been shown to be better banks but are not necessarily being valued as differently as they should be,” he said.

He said attractive stocks in the sector include Guaranty Trust Bank, Zenith Bank and Access Bank.

The senior manager at the fund, Andrea Nanini, also said lenders in the United Arab Emirates offered some opportunities due to cheaper valuations following last year‘s debt crisis in neighbouring Dubai.

Source: Punch