Equities dropped into a correction as plunging oil prices dimmed the growth outlook for Africa’s biggest economy.
The Nigerian Stock Exchange All Share Index fell 3.7 percent on Wednesday to 25,072.66 in Lagos, the lowest level since September 2012 and the most among 93 global indexes tracked by Bloomberg after Egypt. The measure is down 12 percent since the previous peak on Dec. 31, more than the 10 percent drop that indicates a market correction.
“The major factor is the oil price that has weakened further,” Pabina Yinkere, an analyst at Vetiva Capital Management Ltd., said by phone from Lagos. “That has implications for the nation as an oil-dependent country. It has created a heightened risk environment.”
Nigeria, Africa’s largest oil producer, is struggling to cope with crude oil prices that have fallen to below about $31 a barrel. Oil accounts for two-thirds of government revenue and about 90 percent of its foreign currency earnings. The slump is weighing on growth, which is estimated to have slowed tolow to 3.2 percent last year, the slowest pace this century, according to a Bloomberg survey of economists.
Nigerian authorities are also facing mounting pressure to devalue the naira, which John Ashbourne, a London-based Africa economist at Capital Economics, said is strangling economic growth. The Abuja-based central bank has held the naira at 197 to 199 per dollar since March as Governor Godwin Emefiele introduced trading curbs to conserve reserves and stem a rout after it fell to a record 206.32 in February.