* Banking write downs dragged down the share index in 2011
* Nigerian lenders trade at discount to EM peers -analysts
* Index could rally up to 23,000 points this year
By Chijioke Ohuocha
LAGOS, April 30 (Reuters) – Signs of a sharp recovery in
bank earnings for the first quarter are drawing investors to
Nigerian shares after several years of turbulence in local stock
markets following a 2008 banking crisis that wiped 60 percent
off their value.
Africa’s second biggest index soared to a
seven-and-a-half-month high last week, passing the psychological
hurdle of 21,000 points for the first time this year, driven
largely by gains in the banking sector.
Banking stocks have started to perk up after a torrid 2011
which saw them fall 30 percent, reversing an an earlier
recovery, and underperform the overall index, which lost just 17
percent.
Analysts say they still look inexpensive relative to their
earnings and other sectors in the wider stock market, which
leaves room for further growth.
“Nigerian banks are the cheapest … trading on 2012 forward
P/E multiples of 5.2x,” said Soji Solanke, banking analyst at
Renaissance Capital, adding that he expected them to outpace
emerging market peers by a third this year.
Continued…
