Stock market defies election anxieties, soars by N254b

Despite the political anxieties ahead of Saturday’s presidential and National Assembly elections, the equities market closed higher yesterday, extending its eight consecutive days of bull transition driven by positive sentiments for financial services stocks.

Amid tensed atmosphere, investors sustained interest in the shares of companies in the banking sub-sector ahead of others in transactions dominated by the bulls.

The scramble for shares of Diamond, Zenith and Guaranty Trust Bank on Tuesday, however shifted attention from other highly capitalised stocks, causing the All-share index of the Nigerian Stock Exchange (NSE), which rose steadily between last week Monday and yesterday to surge.

Analysts attributed the last minute rally to assumption of limited policy changes in Nigeria, should the incumbent President Muhammadu Buhari be re-elected, or the emergence of candidate of opposition Peoples Democratic Party (PDP), Atiku Abubakar, at the ballot, who is believed to parade economic policy reforms that appear more pro-market.

Also, there are indications of gradual position taking by smart money in the nation’s financial markets due to a combination of factors such as the high dividend yield of listed companies, high interest rate in the money market and other factors considered good enough to offset lower yields in developed market.

Consequently, the All Share Index (ASI) gained 680.44 absolute points, representing an increase of 2.14 per cent, to close at 32,462.31 points. Similarly, market capitalisation increased by N254 billion, to close at N12.106 trillion.

The Chief Research Officer of Investdata Consulting Limited, Ambrose Omodion attributed the ‘last minute’ persistent rally to anticipations of post-election appreciation and positive sentiment for earnings season.

“The seeming positive sentiment for earnings season and post-election rally which had triggered huge trade volume in recent weeks was despite the countdown and heightened political risk ahead of next Saturday’s Presidential election.

“The situation is especially true after the U.S Federal Reserve Bank signalled a dovish stance on rates this year. 


“More so, there is also the assumption of limited policy changes in Nigeria, should the incumbent President Muhammadu Buhari be re-elected, just as the emergence of Atiku Abubakar, candidate of Nigeria’s main opposition Peoples Democratic Party (PDP) at the ballot, with his proposed economic policy reforms that sound more pro-market.

”The bull-run may be the outcome of investors calculating that they have nothing to lose from either of the candidates after all, especially those taking position in equity market ahead of earnings season.

He added: “We expect the ongoing volatility to persist, as investors and traders reposition for 2019 dividend declaration season and post-election rally, which are expected to shape market performance in the interim.

Analysts at Afrinvest Limited said “in recent weeks, we have observed increased inflow into the domestic market despite the political risk. We believe concerns for post-election stability are beginning to moderate thus the increased appetite for cheap assets. Hence we expect the market to record gains in the near-term.”

On the activity chart, Transactions in the shares of Diamond Bank topped the activity chart with 125.82 million shares valued at N304.39 million. Zenith Bank followed with 63.18 million shares worth N1.58 billion, while Guaranty Trust Bank traded 57.13 million shares valued at N2.23 billion.

Transnational Corporation of Nigeria (Transcorp) traded 49.72 million shares valued at N76.05 million, while Access Bank transacted 49.49 million shares worth N354.1 million. Total volume of trades increased by 5.23 per cent to 580.41 million units, valued at N8.03 billion and exchanged in 7,052 deals.

Market breadth was positive, with 38 gainers and 14 losers. Dangote Flour Mills, Livestock Feeds, NPF Microfinance Bank and Jaiz Bank, recorded the highest price gain of 10 per cent, each to close at N8.25, 55 kobo, N1.65 and 55 kobo, respectively, Champion Breweries followed with a gain of 9.88 per cent to close at N1.781, per share.

On the other hand, Regency Alliance Insurance led the losers’ chart by eight per cent, to close at 23 kobo, per share. UACN Property Development Company followed with a decline of 7.85 per cent to close at N1.76, while Lasaco Assurance lost 6.06 per cent to close at 31 kobo, per share.

Unity Bank shed 5.94 per cent to close at 95 kobo, while AIICO Insurance depreciated by 5.19 per cent, to close at 73 kobo, per share.