Investors sue for peaceful resolution of political disputes to save stock market
As aggrieved parties at the just-concluded presidential election approach the court to seek redress, stock market investors at the weekend urged the ruling All Progressive Congress (APC) to adopt a reconciliatory approach and avoid comments capable of heating up the system with dire consequences for the stock market.
They also stressed the need for groups seeking redress to remain upright and follow due process of law in their pursuit of justice to boost investors’ confidence and sustain the current upbeat in stock market.
The stakeholders maintained that theories of investors’ behaviour have revealed that bad news triggers market panic and investors over-react to such negative sentiments.
They warned that political uncertainties and insecurity that pervaded the country in the past, impacted negatively on investors’ sentiments, asset valuations, country risk profile as well as portfolio allocation decisions.
Recall that alleged political intrigues ahead of the 2019 elections took a severe toll on the nation’s stock market, causing investors to lose over N3.43 trillion in nine months of persistent decline.
Within the period, many blue-chip companies quoted on the Nigerian Exchange Limited (NGX) experienced unprecedented losses, contrary to the general expectations of positive earnings in 2018.
Indeed the nation’s stock market had defied election anxiety to record unprecedented improvement in the past few months propelled by investors repositioning ahead of the 2022 full-year earnings and dividend declaration.
For instance, the market reopened on a brighter note on the first trading day in 2023 as investors gained N188 billion in value, while market capitalisation rose to N28.103 trillion from N27.915 trillion at which it closed in 2022.
Also, it was a bullish February on the Nigerian Exchange Limited (NGX) as increased bargain hunting in virtually all the blue-chip stocks persisted. Consequently, market capitalisation soared by N1.4 trillion, while the All-Share index returned 8.89 per cent gain Year-To-Date (YTD).
Specifically, President of Ibadan Zone Shareholders Association, Eric Akinduro, said the political environment has witnessed a lot of tension recently, warning that the market is too sensitive to issues around the political space.
“I think the economy and the polity have witnessed a lot of tension recently and one thing about the stock market is, it is too sensitive to issues around the political space.
“The best advice is that any aggrieved candidate should seek legal redress and that has been done. The outcome will give us direction. The current tempo is not too high so we should be careful of our utterances.”
President of New Dimension Shareholders Association, Patrick Ajudua said: “Aggrieved parties should allow the court process to flow without any negative utterances, as it will affect the positive trend we are enjoying currently in the market.
“The peaceful atmosphere we are experiencing in the aftermath of the election is very important, it has led to a stable investment climate, especially in the equities market. Indeed, this is a demonstration of political maturity.”
“So let the aggrieved parties continue their legal process to seek redress without resorting to violence in the interest of the market and entire economy,” he said.
National Coordinator of Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude said because the capital market is very sensitive, any little instability or sign of agitation can affect it negatively.
He said: “I agree that if the situation is not well managed, it will affect the capital market negatively. The winner should manage his supporters well. Even if the aggrieved faction attacks them, they should adopt a reconciliation approach to maintain peace, after all their principal needs a conducive environment to operate.”