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Nigerian Stock Market

Okey Onyenweaku

Contrary to expectations, the market leapt by significant 5.2 per cent at the first trading day after the swearing in of President Bola Ahmed Tinubu on Monday May 29, 2023.

Reflecting this impressive growth, the NGX All share index jumped from 52,973.88 basis points on May 26, 2023 to 55,769.28 on Wednesday 31, 2023.

This reaction of the market reflected something different from the mood of the people who believe the election was fraught with irregularities and therefore might experience a turbulent swearing in.

Ever since the swearing in, the market has remained positive but at a slower rate of daily appreciation. Aside from continuous inching up of both major index in the past one week, the market had also recorded gains by 0.68 per cent on the Monday February 27, 2023 the first trading day after declaring Asiwaju Ahmed Tinubu President elect.

Sectoral performances were also upbeat as all the five major sectors advanced during the month led by the banking sector, which appreciated by 19.5 percent. Oil & gas sector followed with a rise that rose by 18.7 percent and consumer goods sector with 15.2 percent increase. The insurance and the industrial goods sectors were also up 13.4 percent and 1.8 percent respectively.

The new President had promised at his swearing-in on Monday to expand the economy by at least 6 percent a year, lift barriers to investment, create jobs and unify the exchange rate, while also tackling rampant insecurity.

He also announced the end of the nation’s N400 billion fuel subsidy programme to ease pressure on government finances, saying that savings from the subsidy would be used to fund education and health projects.

He also emphasized the need for a unified exchange rate and a reduction in interest rates to drive up investment, thereby leading to the month-end rally in the equities market.


However, financial analysts believe the smooth hand over which came without any rancor may have worked to the advantage of the market and resulted in the leap that occurred after the swearing in. But they are apprehensive that the recent market rally is unsustainable given that the economy lacks strong fundamentals to drive the equities market.


Commenting on the market rally immediately after the swearing in of the new President, Chief Executive Officer of HighCap Securities Limited, Mr. David Adonri told Business Hallmark on a telephone interview that he does not expect the market to out perform the capacity of the economy which has remained weak even before now.


‘’It was nothing other than the smooth handover to President Tinubu. A lot of people were skeptical that the hand over would not take place. That was the reason on the one hand then together with the new policy direction he set in his inaugural address. It resonated well with investors and apparently boosted investors’ confidence that translated into the very big rally and somehow sustenance of the market value notwithstanding the effect of the removal of Fuel Subsidy.


‘’Of course, it cannot be sustained because if you look at the day after the swearing in when we saw the big rally the market appreciated by over 5 per cent. But ever since the market appreciation has just been marginal at zero point something per cent and zero point some thing per cent. That tells that the economy does not have the fundamental strength to sustain any rally of a high magnitude yet in the equities market.

So that rally itself was at variance with the condition of the macro-economy. The macro-economy has been deteriorating and the State is very weak now as a result of which the possibility of sustenance is very remote. We are still in the market situation where debt financial asset would still be attracted more to debt securities than equity based on the nature of the fundamentals of the economy’’ he said.


This year, equities market has gained 8.1 per cent as the NGX All share Index grew from 51,595.66 points in January 3, 2023 to 55,820.50 points on Friday June 2, 2023. Its market capitalization also surged 8.1 per cent in the review period.

Weak economy

Whatever may be the case, the Nigerian economy which recorded Gross Domestic Product (GDP) growth of 2.3% in the first quarter 2023 is still in bad shape. The economy has suffered immensely to the point that its debt over hang has become a threat to the continued solvency of the country.

Critically, recent statistics reveal that the rate of unemployment, the second highest in the world is 40%. At the same time, the underemployment rate stood at about 25%; even as inflation, which is hitting the roof top stood at 22.3 per cent (A report said inflation stood at over 52 per cent),highest point in the last seven years. At the same time, Diaspora remittances inflow has fallen below what it was in 2020.

Also remarkable is the country’s heavy debt burden at N77trillion (about $150bn)and expected to grow higher at the end of 2023 and still growing; of the budget of N21 trillion for 2023, budget deficit remains huge as over 101 per cent of revenues is used to service debt.


The major revenue earner for the country, crude oil price, which has hit $80 pbd and above presently still fluctuates.

Insecurity has not only hobbled agriculture, many parts of Northern Nigeria have been taken over by bandits such that not much business activities can subsist. The Nigeria’s revenue to GDP ratio hovered between 9 and 10 per cent last year and remains low in the world. These days almost every everybody is aware that Nigeria is the poverty capital of the world recently over taking India with over 130 million people in multidimensional poverty bracket. The Naira which sold at N220/$ in June 15, 2015 has depreciated by about 100 per cent to N730 as at May 26, 2023.

With the fearful scenario above, economic trajectory of the country is still uncertain. Not even with the new government that is being sworn in today.

This is because even the apex bank has warned that care must be taken to galvanize and push the economy out of slumber.

FDI is expected to shrink to reflect the worsening operating environment and investment climate, analysts reckon.

Further explanations consider some of these risk components to include; the political risk components, government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, religious tensions, democratic accountability, and ethnic tensions have a close association with FDI flows.

The above scenario, in fact, captures dramatically what Nigeria is experiencing today. Analysts are in awe how such economy can give hope of pulling up surprises in the near future. They seem discomforted that the same vulnerabilities that impeded economic growth pre-Covid-19 are still visibly predominant in the system and are even worsening. And no expectations from the new President Elect, Asiwaju Ahmed Tinubu.

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