Devaluation of the naira could prompt investor flows into Nigerian stocks at the expense of Kenyan holdings, Renaissance Capital’s Global Chief Economist Charles Robertson said in a telephone interview on June 16.
Nigeria had underperformed the four stock exchanges with the most actively traded stocks on the continent (outside of South Africa) up until June 16. Since then the Nigerian Stock Exchange AllShare Index has recovered to post a 2.72 percent gain for the year to June 21, compared with a 8.44 percent increase for the Moroccan MADEX Index, 3.5 percent for the Egyptian 30 Index and 0.46 percent for Kenya’s Nairobi Stock Exchange All-Share Index.
Over coming years Kenyan equities could have the most to lose now that Nigeria has devalued its currency, said Robertson.
“A bigger issue for Kenyan stock markets or appetite for Kenya assets could be how successful Nigeria is with the currency transition that’s just announced,” said Robertson. “If that’s very successful and Nigeria starts to look very attractive you could see money out of Kenya to go look at those opportunities in Nigeria.”
Equity investors have found the most upside in Kenyan assets over recent years, Robertson said. They have been put off by Nigeria’s currency distortions, while ignoring any economic problems in the Kenya economy, he added.
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