Swedish Fund’s Fading Nigeria Bet Latest Sign of Foreign Exit

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Tundra Fonder AB’s Sustainable Frontier Fund has cut its holdings of Nigerian stocks by more than half within a year in another sign that foreign investors have lost patience with the government’s handling of the economy.

The Stockholm-based money manager’s fund had a 7% weighting in Lagos-traded bank stocks as of December, down from 15% in January 2020, a monthly statement shows. After being among the top three countries in the fund, Nigeria now ranks sixth, with a greater emphasis placed on other frontier markets like Pakistan and Vietnam.

“Nigeria is of lesser interest these days since the mismanagement of the economy as well as the currency, by the government and central bank has for the second time in five years put the economy in a recession,” Mathias Althoff, one of the co-managers of the $220 million fund, said in an emailed response to questions.

Nigeria devalued its currency twice in 2020 as authorities sought to relieve a shortage of dollars that has hobbled foreign investors’ ability to repatriate funds. Even as the benchmark index in Lagos jumped by 50% last year on a wave of local buying, foreigners headed for the exit, with outflows surging to the highest since 2014. The gauge rose for a fourth day on Thursday, gaining 0.6% to the highest since March 2018.

Swedish Fund’s Fading Nigeria Bet Latest Sign of Foreign Exit

“It’s such a shame that it has come this far, when things could have been handled so differently,” said Althoff.

Even though Nigeria’s prospects are being held back by poor management, Althoff hasn’t totally written off Africa’s largest economy and its most-populous nation as an investment destination.

“I still haven’t given up entirely on Nigeria, it still has the biggest potential on the continent,” he said.

©2021 Bloomberg L.P.

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