Stock investors lose N4.3tn, analysts expect post-election rally

Investors in the nation’s stock market have lost a total of N4.30tn in just over one year as it took a beating from uncertainty around the forthcoming elections and interest rate hikes in the United States.

The market plunged to its lowest level in more than one and a half years on January 9 as the market capitalisation of equities listed on the Nigerian Stock Exchange fell below the N11tn mark to N10.940tn.

The market capitalisation had risen from N10.845tn on June 2, 2017, to N11.262tn on June 5, 2017, and hit a record high of N16.154tn on January 19, 2018. It stood at N11.851tn on Monday.

Bloomberg reported on Monday that the Nigerian stock market had fallen more than any other in the world in dollar terms since President Muhammadu Buhari came to office in May 2015.

Analysts said Nigerian stocks could see a relief rally once Saturday’s presidential election was out of the way and rise as much as 10 per cent this year as investors piled back into riskier assets.

Reuters quoted analysts as saying that investors had tentatively started to pick up shares to position for a post-election rally, which could help lift the All Share Index to 35,000 basis points this year from around 31,000 bps now.

Foreign investors pulled out a total of N642.65bn from the nation’s stock market last year, compared to the N435.31 withdrawn in 2017, according to the NSE.

The NSE ASI fell to 29,336 points last month, its lowest since May 2017, and lost 17.8 per cent last year as uncertainty around the forthcoming elections and interest rate hikes in the United States triggered fund outflows from Nigeria.

But since the US Federal Reserve signalled late last month that it was in no rush to raise interest rates again, Nigerian equities appeared oversold, analysts said.

Saturday’s presidential election is expected to be a tight contest between incumbent President Mohammadu Buhari and the main opposition candidate, Atiku Abubakar, a former Vice-President, as the chances of more than 60 other candidates are seen as slim.

Analysts expect a win by either candidate will spur renewed fund flows into Nigerian equities, after foreign investors pulled $2.1bn out of the NSE last year.

“On stock exchange performance under either candidate, we expect to see significant inflows post-elections. There’s the view that Atiku is a bit more pro-business so we could see a relief rally,” analysts at Stanbic were quoted as saying.

Nigerian stocks rose by 0.8 per cent on Monday to 31,782 bps, extending gains for a seventh day and are trading at a near two-month high.

Analysts at Vetiva Capital said stocks had seen a bit of buying before elections but market volumes were low.

The Chief Executive Officer, NSE, Mr Oscar Onyema, said last month that he expected government spending this year to boost economic recovery, following a 2016 recession, which could lift stocks after the election.

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