The Nigerian stock market on Friday advanced a third time in a row showing resilience as Nigerians proceed to elect new leaders.
The Nigerian Exchange All-Share Index gained 0.55 per cent and raised the year-to-date gain to 7.22%. A total of 30 stocks gained, while 11 declined, according to market results released at the end of trading in Lagos.
It was the same trend on the Eurobond market, where the country’s bonds also gained on the eve of the polls. Out of the country’s Eurobonds, only two – those maturing this year and in 2025 fell in price, while the rest gained.
On the stock market, the consumer goods sector led the gainers, rising by 2.55% to a year-to-date gain of 11.78%.
Stocks in this sector that gained included ABC Transport (8.57%); Cadbury (6.17%); and FTNCOCOA (3.39%).
The banking sector came second, as the banks shook off the impact of the current pressure on them brought about by the naira redesign of the Central Bank of Nigeria. Some of the stocks in this stock recorded gains, led by ETI (8.33%);
The oil and gas sector came third in the gainers, rising by 1.29%. Stocks in this sector that gained significantly are Conoil (9.94%); MRS (9.89%). With Friday’s result, this sector has gained 20.04% this year, nearly thrice the average market gain. This is despite the instability that has prevailed in the downstream of the Nigerian oil industry this year, with acute shortage of refined products being experienced across the country.
The technology sector also performed well, with two of the stocks – Computer Warehouse Group and Chams gaining, which gained 8.99% and 7.69%, respectively.
Chinenyem Anyanwu, Chief Executive Officer of Dependable Securities Limited, a Dealing Member of the Nigerian Exchange Limited, said the bulls took over the market a day before the elections because, “There is an expectation of a new Nigeria. Just take it from me, if by Monday the right candidate wins, this All-Share Index will jump full mark.”
But Anyanwu believes the local market moves on the expectation that the right candidate would mean, but declined to name the candidate.
“If by Monday that candidate wins, we will have to use the circuit breaker for this market.
“You remember what happened when Buhari won (in 2015). The market gained an unprecedented 10% (the maximum allowed daily change) in a single day. The circuit bar had to be broken, and it continued like that for the very first week. It only started going in the opposite direction when Buhari hit the ground and couldn’t run,” he said.
Readers would remember that in 2015 President Buhari took a long time to form his cabinet.
Incredible market move
Reacting to the move of the market, another analyst described it as incredible. The analyst said: “It’s extremely incredible that the stock market is going up the day before a presidential election…the week or month before the election. In the past, yet-to-date the market should be negative and stocks dropping because of the election.”
Head of Secondary Market, Nigerian Exchange Limited, Mr Kazeem Alimi, said recently that there had been a reduction in the number of foreign investors operating in the local stock market.
“We have seen a gradual slowdown of foreign participation in the market. From the highs of over 60% in 2014, we have seen that slowed down to about 11% at the end of 2022. So, there has been a significant slowdown,” he said on a breakfast programme organised by Vetiva Capital Management Limited.
“Looking at the market in terms of participation, what we have seen so far is a market that has slowed down in terms of participation of foreign investors, while local investors have been able to take up that tab,” Alimi added.
With Nigerian investors having taken over the space left by the departing foreigners, the analyst said local investors believe nothing untoward will happen after the elections.
“At least, one of the presidential candidates will win, and they will just continue what they are doing.
“It is very interesting because if you asked many people, they would have said let us wait till after the elections. But if you had waited, you would have missed out because, in the last three months, the stock market has gone up by about 20%,” the analyst said.
He pointed out that the unusual move of the stock market also extended to Nigeria’s Eurobonds. 11 of Nigeria’s Eurobonds, with maturities stretching from November 2027 to September 2051, gained on Friday. The two that fell were the $500m bond maturing this July, and the $1.25bn bond due in November, 2025.
He noted that for the stock market, one could say that Nigerians don’t care, since they believe the companies are paying good dividends so they are buying shares. “Foreigners are the ones who control the Eurobond; Nigerians hold five per cent. Why are they pushing up the price?”
The analyst warned that if the winner of the presidential poll made any attempt to restructure the country’s debts, Nigeria would become a pariah state.
“Nobody will lend money to anybody in Nigeria. Maybe the market knows that those people are just talking politics,” he added.
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