By Nkiruka Nnorom
FOLLOWING the postponement of the presidential elections few hours to the commencement of the exercise by the Independent National Electoral Commission, INEC, on Saturday, operators in the capital market have noted the possibility of the development returning the equities market to a bearish state.
They affirmed that the postponement could bring uncertainty in its trail but stated that the expectations of 2018 year end financial report, soon to hit the market, could offer some reprieve.
The equities market had closed in the green last week, in consolidation of previous gains with investors’ net-worth rising by N442 billion, a 3.76 percent week–on-week (w/w) growth to N12.200 trillion.
Similarly, the benchmark All Share Index, ASI, jumped by 3.76 percent to settle at 32,715.20 points, the highest weekly gains in four weeks.
Investment bankers had expressed high hopes that the rally would be sustained, hinging their hopes on a successful, violent free election and post election stability.
“In the new week, we expect the Nigerian equities market to close in green territory as Nigeria crosses the political bridge tomorrow (Saturday, February 16). We expect investors to remain bullish on the back of improved corporate earnings, violence-free elections and the possibility of the emergence of a market-friendly president,” Cowry Asset Management, an investment banking firm, had said prior to the postponement.
However, operators and investors alike have reversed their outlook following Saturday’s election postponement.
“What the postponement does is to bring in huge uncertainty and that is one of the things the market does not deal with. Once something like this happens, the market begins to wobble.
“As soon as there is uncertainty, it affects the market. People cannot make decision in an atmosphere of uncertainty and investment is about decision making . So, if no decisions are made, there will be no demand and it, therefore means that if there is no demand, the market is likely to go down,” said Emeka Madubuike, Managing Director/CEO, Compass Securities.
Mr. Adebayo Adeleke, former General Secretary, Independent Shareholders Association of Nigeria (ISAN) said: “An atmosphere of uncertainty will pervade the nation and the market throughout this week. Investors will surely express caution in their dealings.”
However, Alhaji Gbadebo Olatokunbo, president, Noble Shareholders Association, said that the postponement might not have significant negative impact on the market going by election antecedents in the country.
“The market shall not be affected by the postponement, but I don’t rule out the possibility of speculation which is part of capital market system.
“Some prudent investors had benefitted by buying long before February 16 and many clever ones will still benefit on the postponement,” he said.