Perhaps the euphoria which greeted the market and nudged it almost to an unrealistic height when General Mohammadu Buhari was announced winner of the 2015 Presidential Election seems to have abated.
Signals appear mixed as the market is now trying to assume a more realistic disposition. The rate of acceleration of the market close to and immediately after election has been unprecedented, at least in the past nine months.
The market capitalisation which rose by 4.8 per cent from N9,845 trillion on Monday March 23, 2015 to N10,318 trillion on Friday March 27, 2015 before the Presidential election also climbed by about 8.30 per cent its single biggest daily gain this year, wiping off the negative Year to Date (YTD) performance immediately after elections.
Interestingly, the week after the election the market capitalisation rose by 15.6 per cent from N10, 493 trillion on Monday March 30, 2015 to N12,135 trillion on Thursday April 2, 2015.
Since after the election the market index seems to have moved more to the South than to the North reminding investors that the market leap may have been a one- off activity.
For instance, the market has lost about 0.51 per cent in a consistent drop from N11,990 trillion on Monday April 13 , 2015 to N11,928 trillion on Friday April 17, 2015.Even though dropping at a slower rate now, many investors may have misdiagnosed the macro- economic prospect of the country, thinking and believing that the incoming government might do some magic to change situation overnight. ” It is not true. The economy of the country is already in bad shape. You can be optimistic but things cannot change overnight”, an investor who is conversant with capital market said.
Looking at the issues of the Nigeria’s operating environment, investors are still cautious given the fact that market fundamentals have not changed. The price of crude oil which peaked at about $114
per barrel in June 2014 still hovers between $54 and $57 per barrel. Energy has not improved, budget benchmark is yet to be decided and smoothened between the Executives and National Assembly, the nation’s production output keeps falling and the Central Bank of Nigeria is still grappling to stem the fall of the Naira. Despite the peaceful elections, many stakeholders have yet to grasp one strand of reason to believe the economy will do better under Buhari’s watch than that of
Jonathan. These, analysts say, are still worrisome since there are no convincing reasons to think that the new president is more economically savvy now than before.
Investors are not as confident that the market growth a few weeks ago is not a flash in the pan given that the same stocks which reacted sharply to the North are tracing theirs steps back to the South.
The capital market reacts to many things of which change in fundamentals, announcement of results among other sentiments are of importance, Dr. Afolabi Olowokere observed.
Olowokere is almost sure that the market reacted positively because of the peaceful election and not because General Buhari has won. He explained that there was uncertainty in the air which propelled investors to take different decisions.
”Investors are not stupid and foreign investors know when to stay and when to exit the market’, he said.