A Nigeria country-specific exchange traded fund jumped Friday, with Nigerian markets hitting a 16-month high, as local companies revealed stronger-than-expected corporate earnings that weathered the storm from the coronavirus pandemic.

Among the best performing non-leveraged ETFs of Friday, the Global X Nigeria Index ETF (NYSArca: NGE) surged 7.3%. NGE also gained 11.1% over the past month.

NGE YTD Performance

Nigerian markets began to gain momentum in October after the central bank cut interest rates and the increased money market liquidity flowed into equities, Reuters reports.

Ahmed Jinad, Head of Research at Meristem Securities, noted that yields on T. bills dipped below 1% this week, which made equities a good choice for investors seeking growth especially as inflation rises into the double-digits.

Meanwhile, the nine-months company results revealed better than expected earnings, easing concerns over the impact of COVID-19, Jinad added.

“The impact has not been as severe. So far nine-months have picked up mostly in the foods and telecoms sectors,” Jinad told Reuters.

Looking ahead, the accommodative monetary policy could help maintain its forward momentum.

The NSE All-Share Index has so far rallied this month, despite the recent social unrest across the country, which some believed could hinder investors’ confidence and market activities.

“With mouthwatering returns delivered to investors so far, we are continuously inundated with two questions. 1) When do you see the interest rate environment turning? 2) Do you think the stock market rally is sustainable? Well, we think both questions are related, given that a return to double-digit yield environment will clearly discourage the recent bullish sentiment for stocks,” the United Capital analysts said, according to Business A.M.

“However, we do not see a return to double-digit yield in the interim, no thanks to trillions of naira worth of maturities in the horizon, projected to remain till Q1-2021,” they added.

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