Are Building Materials Stocks a Hedge Against Inflation in Nigeria

E Chuke Nwude

Asian Journal of Empirical Research, 2013, vol. 3, issue 10, 1343-1361

Abstract: This paper investigates the extent to which stocks of Building materials firms listed in Nigerian Stock Exchange (NSE) are a hedge against the expected and unexpected inflation in Nigeria over the period 2000–2011. Unexpected inflation is computed as the difference between the actual inflation and the estimates of the expected inflation. The study used real rate of return on equity and regression analysis to find the stocks that provide positive real return and offer inflation-hedging potentials respectively. The findings revealed that in terms of real return based on shareholders’ funds and total return to equity, all the firms were not susceptible to adverse effect of inflation but when based on dividend yield all the firms offered no significant hedge against inflation.

Keywords: Return on equity; Real return; Nominal return; Consumer price index; Inflation-hedging capacity; Shareholders funds; Dividend yield; Capital gain yield (search for similar items in EconPapers)
Date: 2013
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