Nigeria’s benchmark stock index fell the most in six weeks Wednesday, as earnings from some of the country’s biggest companies proved disappointing and some investors opted to move money out of equities.
The Nigerian Stock Exchange All Share Index dropped 1.1 percent, the most since June 21. Royal Exchange Plc declined 10 percent to be the worst performer. Dangote Cement Plc, the largest share by market value, fell 1.3 percent, contributing the second-most index points to the benchmark’s retreat. Nigerian Breweries Plc retreated 1.9 percent.
Some companies have cut their earnings forecasts following weak half-year results, Olufemi Awoyemi, chief executive of Proshare Nigeria Ltd., said by phone from Lagos. “Some investors want to play safe and are moving to the fixed-income market.” Rising political tension also played a role in Wednesday’s trading.
Nigerian leader Muhammadu Buhari has lost a key supporter in his northern stronghold, a day after the senate president walked out of the ruling party amid a wave of defections to a swelling opposition movement ahead of elections in February. The governor of northwestern Sokoto state, Aminu Tambuwal, left the All Progressives Congress to join the People’s Democratic Party, which ruled Nigeria for 16 years until Buhari’s 2015 win.
Earnings for Dangote Cement and Nigerian Breweries haven’t been “particularly positive” and the two companies account for almost half of the market, said Michael Famoroti, an economist at Vetiva Capital Management Ltd. The wider political and economic situation is expected “to drive the medium-term market performance,” he said.