Stock Market Takes A Deep Plunge

Nigeria’s broadest stocks measure declined for a 10th day, the longest streak of decreases since August 2009, as political turmoil in Libya curbs demand for frontier- and emerging-market assets.

Declines by First Bank of Nigeria Plc (FIRSTBAN) and Guaranty Trust Bank Plc led the Nigerian Stock Exchange All-Share Index 0.3 percent down to 25,174.24 by the 2:30 p.m. close in Lagos, according to figures e-mailed by the bourse. First Bank, the biggest lender by market value, slipped 2.3 percent to 14.19 naira, the lowest since Jan. 4. Guaranty Trust retreated 1.6 percent to 18.8 naira, the weakest since Jan. 10.

Libyan rebel fighters prepared an offensive to regain a town lost to Muammar Qaddafi’s forces as the U.S. and its allies stepped up the debate on imposing a no-fly zone that might help the insurgents win the civil war. Crude declined as much as 2 percent to $103.33 a barrel today after Al Jazeera television reported that Qaddafi had sought negotiations on his departure.

“A lot of money is moving out of the emerging markets,” as the crisis in the Middle East curbs investors’ appetite for riskier assets, Akinbamidele Akintola, a Lagos-based equity analyst with Renaissance Capital, said by phone today.

Emerging-market stock mutual funds had their sixth straight week of outflows, Citigroup Inc. said March 4, citing data from research firm EPFR Global. Redemptions of $2.5 billion in the week ended March 2 quickened from $1.9 billion a week earlier, according to a report by Citigroup analysts.

High yields on Nigerian government bonds have also proved very attractive to investors, Akintola said. The federal government’s 10 percent bonds due July 2030 yielded 13.33 percent in the secondary market yesterday, according to the Financial Markets Dealers Association’s website.

“As an investor, this is more attractive than equity,” Akintola said. The All-Share index has increased 1.6 percent this year, outperforming a 9 percent decrease in the MSCI Frontier Market (MXFM) Index and 1.4 percent decline in the MSCI Emerging Markets Index.

The Nigerian market will rebound as soon as companies begin to release their results for 2010, Guy Czartoryski, a London- based analyst with CSL Stockbrokers Ltd., said by phone today.

“People are holding on to see fourth-quarter 2010 results, and the banks are really very key,” he said by phone today.