Nigerian Stocks Rise to Eight-Month High As Pres. Goodluck Won His Party’s Presidential Nomination

By Vincent Nwanma (Bloomberg) --

Nigerian stocks, the world’s best performers this year, rose to an eight-month high as President Goodluck Jonathan won the ruling party’s nomination to compete in an election this year, easing concern that infighting would destabilize the nation.

The 215-member Nigerian Stock Exchange All-Share Index added 0.9 percent to close at 27,267.17 by 2:30 p.m. in Lagos, according to an e-mailed statement from the bourse, the highest since May 19. The measure has gained 10 percent this year, making it the best-performing equity index among 91 tracked by Bloomberg. Nigeria Breweries Plc, the second-biggest company by market value, led gains, surging 5 percent to 91.43 naira, the highest since 2002.

Jonathan, 53, won more than 70 percent of the votes cast by delegates today at the ruling People’s Democratic Party’s convention in Abuja, the capital, defeating former Vice President Atiku Abubakar. Africa’s most populous nation will hold presidential elections on April 9.

The nomination “reduces the political risk and enhances the stability of the current bull run in the market,” David Adonri, chief executive officer of Lambeth Trust and Investment Co., a Lagos-based brokerage, said by phone today.

Jonathan, a Christian from the oil-rich Niger Delta, became president last year after the death of President Umaru Yar’Adua, a Muslim from the north. His candidacy for a full term as president is contrary to an unwritten party rule to rotate the top office between the mainly Muslim north and the predominantly Christian south for two four-year terms. The PDP has held power in Nigeria, the fifth-largest source of U.S. oil imports, since a return to civilian rule in 1999.

‘Compelling’ Investment

His emergence “may not cause stock prices to jump, but it means that investors will not have fear of violent changes,” Chinenyem Anyanwu, chief executive of Dependable Securities Ltd., a Lagos-based brokerage, said by phone today.

Nigeria’s stock index gained 19 percent last year after falling 64 percent in two previous years as the nation took steps to stem a debt crisis that resulted from loans by banks to speculators. The Central Bank of Nigeria fired eight bank executives in 2009, bailed out the industry with 620 billion naira ($4 billion) and set up Asset Management Corp. of Nigeria, a company that is buying bad debt from lenders.

Nigeria’s equity-market is “compelling,”, Renaissance Capital said yesterday. “Concerns over the political landscape have been slightly exaggerated and may present buying opportunities,” Olaleye Adekeye, a Lagos-based analyst with the company, wrote in an e-mailed note to clients dated yesterday. “Excessive caution may prove expensive.”

--With assistance from Paul Okolo and Elisha Bala-Gbogbo in Abuja and Nasreen Seria in Johannesburg. Editors: Ana Monteiro, Antony Sguazzin.

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net.

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net