The Nigerian equities market has again outshone two of the major stock Exchanges in Africa, Kenya and South in its year-to-date (YTD) performance, having sustained its upward trajectory in the new year.

The Nigerian Stock Exchange (NSE) surged by 13.4 per cent in January, and has now risen by 18.5 per cent Year-to-Date (YTD).

The comparable index in Kenya, the second largest exchange in sub-Saharan Africa outside South Africa, has risen by 15.3 per cent.

While South Africa has moved from frontier market to emerging market, its YTD performance is still far below that of the Nigerian equities market.

Analysts at FBN Capital Limited believe much of the growth recorded by frontier market may be as a result of massive offshore investment in frontier markets.

The offshore investment in frontier markets, they added, has been driven by loose monetary policy in developed economies, led by the United States and most recently Japan.

They added that the latest International Monetary Fund (IMF) positive outlook for frontier market is also driving investors to the markets.

The IMF’s latest World Economic Outlook projects growth in 2103 at 7.2 per cent in Nigeria, 5.8 per cent in Kenya and 2.8 per cent in South Africa.

According to FBN Capital, “The Kenyan market enjoyed a strong but short-lived run in the days after the elections in March once it became apparent the country would not succumb to the ethnic violence and economic dislocation that followed the previous polls. It proved, as we suspected, a relief rally. We include South Africa in our chart because

it is often compared with Nigeria. In practice, however, it is an emerging (not a frontier) market, and a far greater victim of the global credit event.”
The analysts stated that the more robust performance in Nigeria can be attributed to better prospects for growth and household consumption.

They added, “In the absence of reliable industry indicators, we base our call on manufacturing investment.”

“The FGN has a window to accelerate its reforms before the next elections so as to sustain the projected growth. This will in a long way ensure that the Nigerian equities market remain dominant in terms of performance among frontier markets,“ they said.

Source: Thisday (by Eromosele Abiodun)