The Impact of Inflation on Stock Market Investment Performance: Evidence from Airlines Automobiles Road Transport and Maritime Sectors Stocks of the Nigerian Stock Exchange

Abstract

This paper investigates the extent to which stocks of Airlines/Automobile/Road transport/Maritime firms listed in Nigerian Stock Exchange (NSE) are a hedge against the actual inflation in Nigeria over the period 2000–2011. Actual inflation was computed using the estimates of the consumer price index. 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 property 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.