Nigeria's stock market is becoming the most interesting one on the African continent to foreign investors after the country devalued its currency, emerging market veteran investor Mark Mobius said on Wednesday.
Earlier in June, Africa's biggest economy finally ditched its 16-month old currency peg to the dollar that had throttled foreign exchange markets, led to widespread capital flight and caused its first quarterly economic contraction since the 1990s in a move widely welcomed by investors.
"Probably now, it would be Nigeria, simply because they are in such a bad shape," said Mobius, executive chairman of Templeton Emerging Markets Group.
"Everybody is concerned what is happening to the country ... so Nigeria would be the place to look now," he said in an interview on the sidelines of an Africa investment conference.
Templeton has around $700 million assets under management in its dedicated Africa fund, which has its biggest holdings in Egypt, Nigeria and South Africa.
"The naira is still a bit overvalued, so we could see a further fall in the naira," he said.
After the peg of just under 200 to the dollar was abandoned, the naira has been trading at around 282 this week but was trading at around 350 on the black market.
Mobius said Templeton could add to its holdings in the country in the second half of the year.
But he added he would like to see a further rise in oil prices, more outside investment in the power sector and a push on law and order in the impoverished but oil-rich Delta region as well as see more progress in how the government deals with the threat from militant group Boko Haram.
Stocks had rallied more than eight percent last week after the peg was removed.
However, stocks have extended losses this week amid fears that demand for riskier assets will evaporate and the flow of foreign funds into Nigeria will dry up as a consequence of Britain's vote to leave the European Union last week.
By: Reuters (London).
Reporting: Karin Strohecker.
Editing: Richard Balmforth.
Photo: Africa Business Classroom.
Review: Emerging Market Formulations &
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