Egypt stocks jump on devaluation as Nigeria worst in EM

Nigerian stocks are the worst performers in the emerging market (EM) space quarter to date (QTD), while Egypt’s are the best, following the devaluation of the Egyptian currency the pound, according to a screen of EM stock markets run by Business Day.

Egypt’s currency was trading at around LE15.50 against the US dollar earlier last week, down from an official rate of LE8.88 earlier in the month. The devaluation also paved the way for a $12bn loan from the International Monetary Fund (IMF).

Egyptian stocks soared following the devaluation as investors bet offshore funds that have stayed away from the country’s assets will start buying.

The main stock benchmark index broke the 10,000 barrier, up from 8,800 points two weeks ago, and closed trading on Friday at 11,221.56 points (see chart). Egyptian stocks are up 42.3 percent QTD, while its currency is down some 44.84 percent.

Source: Bloomberg, BMI

Other top gainers in the EM space this quarter include Saudi Arabian stocks (+17.88%), Morocco (+6.57%), and Kenya (+1.48%).

Nigeria comes in dead last with its benchmark NSE all share index returning -9.87 percent as its currency remained artificially propped up by its Central Bank (it was down just -0.31 % for the quarter), which is spooking investors.

If Nigerian regulators are thinking about what is ailing their financial sector they probably would want to take a look at this screen.

The artificial peg put in place by the Central bank of Nigeria (CBN) is for now still causing more harm than good to Naira assets.

 

PATRICK ATUANYA