Nigerian stocks headed for a nine- month low as concern Europe’s debt crisis may spread curbed demand for frontier-market assets and on speculation the country’s banks won’t meet a recapitalization deadline.
The Nigerian Stock Exchange All-Share Index 0.8 per cent to 23,981.84 by 2:29 p.m. in Lagos. A close at this level would be the weakest since October 8. Guaranty Trust Bank Plc, the third- biggest lender, dropped five per cent to N14.2 the lowest since December 24.
European finance chiefs resulted in a six-paragraph statement in which the 17 euro governments pledged to flesh out a new master plan “shortly” to end the 21-month-old crisis, without setting a timeline. The meetings resumed today with all 27 European Union finance ministers planning a response to the release of bank stress tests later this week.
“Confidence in the equity market is still low, not just in Nigeria but globally,” Esili Eigbe, a Lagos-based analyst with Stanbic IBTC Bank Plc, said by phone today. “Investors want to see improvements in the global economy before they can invest.”
The Central Bank of Nigeria has given the eight banks it bailed out in 2009 until September 30 to recapitalize or risk being liquidated or nationalized. Nigeria’s central bank fired eight of the country’s 24 chief executives after a debt crisis threatened the industry with a collapse, and bailed out the lenders with N620 billion ($4.1 billion).
“People are still skeptical over Nigeria’s banking reforms, including the deadlines for the rescued banks,” he said, according to Bloomerge report.
The lenders bailed out by the central bank are Oceanic Bank International Plc Union Bank of Nigeria Plc, Intercontinental Bank Plc and Bank PHB Plc. Others are Afribank Plc, Finbank Plc Equitorial Trust Bank Ltd. and Spring Bank Plc.