Allan Gray Ltd., which oversees $29 billion in assets, favors Nigerian stocks over South Korean equities, seeing them as a diversification play away from the artificial-intelligence frenzy sweeping global markets. Nigeria's benchmark stock index has surged 72% in dollar terms this year, on track for its biggest annual gain since 2007 and outpacing the Kospi's 54% advance.
Kamal Govan, a portfolio manager at Allan Gray, who runs the Cape Town-based money manager's $604 million Africa ex SA Equity Fund, said the Nigerian market is now "in the same conversation" as South Korea's Kospi Index. The fund has gained 28% this year, and Nigerian equities account for nearly a third of its holdings. Govan described the Kospi as "narrow and thematic, concentrated in two memory chip companies," noting that Samsung Electronics and SK Hynix Inc. make up nearly half of the index. By contrast, he said, "Nigeria's rally has been broad-based, spanning banks, oil and gas, telecommunications and industrial goods."
Seplat Energy Plc is the fund's biggest exposure to Nigeria's oil and gas sector, with shares up 197% in dollar terms this year. Sterling Financial Holdings leads the pack, with shares up 1,078%, ranking among the top performers on the 151-member index.
Nigeria, Africa's largest crude producer, received a further boost when FTSE Russell upgraded it to frontier-market status last month. The move reverses a downgrade to unclassified status three years ago over concerns about investors' ability to repatriate foreign currency. Govan said the upgrade "could provide a further catalyst through increased foreign participation and improved liquidity."
Source: Bloomberg Markets · Summarized by HeadlinesBriefing