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Stocks extend gains on election results

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Election

Election

• Market capitalisation rises by 8.5%
• Naira gains strength

WITH the announcement of Gen. Muhammadu Buhari as President-elect, the market capitalisation of the Nigerian Stock Exchange (NSE) soared by 8.5 per cent yesterday.

The upward trend became noticeable on Tuesday, after news of Buhari’s imminent victory spread across the country. Also, events took a dramatic turn in the foreign exchange market yesterday with the naira gaining strength with other major currencies, to stem its hitherto sliding profile.

The market capitalisation of the NSE increased significantly after the nation’s presidential election, appreciating by N906 billion. Specifically, the capitalisation of listed equities rose by 8.45 per cent (from N10,717 trillion to N11,623 trillion) traded Tuesday.

Also, the NSE All Share Index closed higher, crossing 34,000 mark to hit 34388.46 points which is the highest growth recorded so far this year. Investors bought 881.584 million shares valued at N10.938 billion in 4611 deals.

In the first quarter, the capital market indicators lost 8.40 per cent as a result of the uncertainty surrounding the 2015 general elections and poor macro-economic factors. Market capitalisation of the listed equities under the period went down by N76 billion to close at N10.718 trillion, while the NSE All-Share Index fell by 8.40 per cent to close at 31,744.82 on March 31, 2015.

Operators explained that since the history of stock trading with machine, the market has not recorded such significant improvement.

A stockbroker with Deloitt Securities Investment, Tunde Oyediran, described the improvement as “restoration of investors’ confidence.” According to him, the volume of transactions recorded yesterday as a result of massive ‘buying’ from investors showed that there are anticipations of positive prospects coming to the stock market.

“We have never seen the market move this way. Before now, we have recorded three to four per cent growth maximally, but yesterday, it was 8.3 per cent increase. It is a kind of restoration of investors’ confidence. Confidence has been brought back. People are buying in anticipation of positive prospect coming to the capital market. Confidence has been increased. Investors are expecting much from the new leadership because of his past performance. They are expecting good corporate governance that would translate to improved corporate performance in 2015.”

The Managing Director of Highcap Securities Limited, Tunde Adonri, said the market surged heavily with over eight per cent increase. He explained that most of the stocks are on full bid without offer, noting that the stock market has reacted positively to the emergence of Buhari as the new president of Nigeria. “Investors reacted heavily to the election of Buhari as the president, and if the post election peace is sustained with market oriented economic policies, it would continue to drive the market.”

The stocks, on Tuesday, extended their gains, rising almost one per cent in early trade to a three-week high as investors reacted positively to a possible win by the opposition party in the last Saturday’s closely fought presidential election.

The index of Nigeria’s top 10 lenders rose 1.8 per cent, partly lifted by positive earnings from some banks.

“Projections that Buhari may eventually be announced president-elect, sent a positive signal to the markets that there would be a change to the way things have been done in the past,” Ayodeji Ebo, the head of research at Afrinvest said, referring to Buhari.

“With a few exceptions, President Jonathan’s stewardship of the economy has not been taken refreshingly, so this would be seen as an opportunity for a fresh start for the country,” analyst, Richard Segal, said.

The naira held steady at N218 against the dollar on the parallel market operated by bureau de change agents, while on the interbank market, it opened at N199 to the dollar. The naira gained from N13 to N15 against the greenback yesterday, from parallel markets (Black Market) in Lagos, translating to huge percentage rise.

The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, had described the rise in naira value as “dramatic” and a response to peaceful polls, against speculations of rigging and massive protests.

“In my honest opinion, I would advise anybody with dollar to offload them now. The trend is fast dropping to the lowest point and would be sustained because there is hope of real change in economy.


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