Tag: Election Results

The stock market is literally on a momentary pause as investors await political direction to determine their investment decisions. The momentum of activities and price rally at the equities market slowed down at the weekend, capping a week-long tip-tap trading that was overshadowed by the earlier postponement of the general elections.

Equities recorded average decline of 0.61 per cent last week, equivalent to net capital depreciation of N74 billion. They  had in the days leading to the postponed February 16, 2019 elections sustained a strong rally, with net capital gains of N805 billion within 11 trading days preceding the postponement.

Despite the gathering earnings season that saw the release of audited results and dividends of many listed companies, all three major indicators that determine the turnover of activities at the stock market closed at the weekend negative. Total turnover volume, value and number of deals at the Nigerian Stock Exchange (NSE) declined by 47.7 per cent, 37.28 per cent and 28.85 per cent.

Total turnover stood at 1.48 billion shares worth N17.65 billion in 20,449 deals last week compared with a total of 2.83 billion shares valued at N28.14 billion traded in 28,739 deals in the week that preceded the election postponement.

The All Share Index (ASI)- the main index that tracks share prices of all quoted companies on the NSE, closed weekend at 32,515.52 points, 0.61 per cent below its week’s opening index of 32,715.20 points.

Aggregate market value of all quoted equities also dropped from that of February 15 closing value of N12.200 trillion to close weekend at N12.126 trillion. The average year-to-date return slipped to 3.45 per cent.

The pricing trend showed cautious optimism, with steady corporate earnings, good valuations and attractive yields at the market moderated by political risk.

Although there were almost an advancer for every decliner, market analysts said the political risk loomed larger than other considerations. There were 34 advancers last week as against 60 advancers in the previous week while the number of decliners rose to 38 stocks last week as against 21 stocks recorded in the week preceding the postponement.

At the fixed-income markets, overnight lending rate rose by 2.75 per cent to close weekend at 20.25 per cent.

Average yields in the bond market also increased marginally with sell pressure within the mid to long-term securities. While continued support from the Central Bank of Nigeria (CBN) kept the Naira stable, there was considerable increase in activities at the official Investors & Exporters’ window of the apex bank.

Total turnover at the Investors & Exporters’ window rose by 26 per cent with almost all the deals done within N360-369 per Dollar range.

Analysts at GTI Securities said the market’s attention had shifted to the rescheduled election and investors were waiting to see the outcome of the crucial presidential and national assembly elections, which most agreed will set the tone of other state elections.

Vice Chairman and Chief Executive Officer, Capital Assets Limited, Mr Ariyo Olushekun, said the market’s direction will be determined by the resultant confidence in the outcome of the national elections.

According to him, the appetite of foreign investors, who account for half of transactions at the Nigerian stock market, will be moderated by the political risk.

He said the Nigerian market will break into a major rally once foreign investors return to aggressive investment in Nigerian market.

Financial market analyst and Fixed Income Trader, FSDH Merchant Bank, Mr Babajide Sholanke, said the market anticipates the results of the elections because the outcome will determine either the policy consistency of the ruling government or a “wait-and-see” of new policy outcome if the opposition party wins.

“The outlook for the market is still a wait and see situation. The market has held back on investment and consumption expenditure because of the seeming uncertainty of the election outcome. Thus, we would continue to witness a wait and see approach if PDP wins and opening up of wallet if APC wins,” Sholanke said.

He said yields at the fixed-income market are also expected to remain around the current level after the elections while foreign exchange rates are expected to be stable in the short to medium term because of strong external reserves.

Cordros Capital stated that sentiments in the Nigerian equities market turned negative as the tense political environment acted to drive investors’ apprehension towards risky assets.

“With election risk now out of the picture, as we anticipate a peaceful exercise, together with the still supportive macroeconomic picture, we guide investors to cherry pick fundamentally sound stocks in a bid to ride the wave of the market rally, post-polls,” Cordros Capital stated.

Afrinvest Securities noted that investors reacted negatively to the postponed presidential election before recalculating the political risk and subsequently re-positioning in the market.

Afrinvest Securities stated that cautious trading, in terms of volumes and higher sell-offs moderated the stock market performance.

According to Afrinvest Securities, most investors stayed on the sidelines last week as the uncertainty regarding the elections heightened by the middle of the week.

“We expect market direction to be largely determined by the outcome of the presidential election,” Afrinvest Securities stated.