Investors upbeat, as capitalisation gains N1.82tr in four days

In what some have tagged the Buhari effect, the health barometers of the Nigerian Stock Exchange (NSE)- the market capitalisation and All-Share index, soared further as the market closed for the public holidays declared for Friday and Monday to mark the Christian feast of Easter.

Capitalisation (a summation of the share prices of all companies listed on the bourse) and the index, which tracks average movement of prices, gained N514.10 billion or 4.42 per cent and 1,347.98 basis points or 3.92 per cent respectively.

The Nigerian Stock Exchange (NSE)

This gain, added to Wednesday’s N903.435 billion, brought the week-to-date rise to N1.816 trillion, while the All-Share index jumped by 5,165.19 points or 16.9 per cent, as 72 stocks closed green, with Guaranty Trust Bank hitting a new ‘high’ of N31.88, among three others, while only five closed in negative territories.

Banking stocks recorded the most significant gains on the average as seen in the NSE Banking index notched 23.19 per cent; followed by the blue-chip NSE-30 index’s 17.91 per cent; while the oil and gas index closed 16.14 per cent green; among others.

Reacting to the jump, analysts at Lagos-based investment banking group- Dunn Loren Merrifield Limited, said the market “extended its bullish run to 10 consecutive trading days, (up by +21.80 per cent) as investors remained upbeat following the outcome of the elections.

“This in our view suggests that investors are willing to take advantage of the opportunities in the market, most especially given the attractive valuations. We therefore envisage a gradual return of domestic and foreign investors,” they said in a report to clients on Thursday evening.”

As a result of the robust recovery mode the market, especially since the announcement of the results of last weekend’s Presidential poll and the declaration of General Mohammadu Buhari, candidate of the opposition All Progressive Congress (APC) as winner, year-to-date returns on investment on the NSE entered “to positive region (3.09 per cent).”

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Also commenting on the market’s performance for the week, DLM researchers said the “rally suggests that investors appear to have priced-in the outcome of the just concluded 2015 presidential election – which provided a new wave of relief driven by a positive near term outlook. This is further supported by the strong investors’ sentiment seen throughout the week.”

Also reacting to the gains, Sunny Nwosu, an investor-activist and National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), agreed that the rise in share prices was driven by the peaceful conduct of the elections and the fact that the much anticipated crisis did not crystalise. The tension before and after the Presidential poll, he said, was further doused by President Goodluck Jonathan’s acceptance of defeat, an indication of the fact that Nigeria’s democracy is “maturing into civilisation.”

Nwosu however urged everyone to continue working “to ensure that things work.”

He does not however believe that development would continue, since every stock market must be flexible and react to both negative and positive developments in the environment. Such swings, he said, is the only way the market can be sustainable, because if it goes just one-way, it will suffer huge shock whenever there is a problem.

Gbadebo Olatokunbo, another shareholder-activist, believes that the market is already reacting to the anticipated orderly conduct in the economy and governance, judging by the anticidents of the President-elect as a no-nonsense person.

He lamented that because of the high dose of hate campaign taken to the extreme in the days leading to the elections, causing so much anxiety across the country, with Southerners relocating from their homes in the North.

“I am not surprised at all. In about six months’ time, most stock prices would go up,” he said, matter-of-factly.

He linked his enthusiasm to the fact that many of those stocks had been held down by activities of woe-mongers, just as he said economic growth would soon begin to impact the lives of ordinary Nigerians.

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Nona Awoh, another popular shareholder-activist, also told Daily Independent on Thursday in a telephone chat, that the growth so far seen in the market has been induced by domestic investors “in anticipation of what will come from the new government.”

He however warned, just like Nwosu, that the growth cannot be sustained, going by the nature of the nature of every stock market.

Awoh said deliberate activities of the new government such as policy stability is necessary to reduce volatility in the stock market, just as expectations that a new Director-General would be named for the Security and Exchange Commission (SEC) in the coming week or two, he added.

Meanwhile, following the affirmation of Buhari as duly elected President, the Naira again closed firmer on Thursday against the US$, appreciating by N20 or 9.52 per cent to close at N190/$ at the unofficial market. At the height of the anxiety, the Naira changed hands for N250/$ in the week before the rescheduled polls.

Official Central Bank of Nigeria (CBN) rate however remained at N197/$1, just as oil price at the international market continued to gather momentum, closing at $55.28, according to data by Dunn Loren Merrifield, up from $44.49 per barrel.  The Federal Government has proposed a benchmark of $53/b of crude, representing an improvement of $2.28 over the benchmark. It however represents a decline of $2.26 decline from the $57.54/b it sold on December 31, 2014. Government initially set the benchmark price for the 2015 budget at $78 before a downward review to $73 and then $65/b before the latest.

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