Tinubu’s lead excites investors, equities rally N467b in two days

Tinubu’s lead excites investors, equities rally N467b in two days

Foreign and domestic investors are swarming on Nigerian investment assets as emerging results of the weekend’s presidential election favoured the emergence of the former Lagos State Governor, Asiwaju Bola Tinubu as the next president of Nigeria.

Nigerian equities have gained N467 billion in the past two days since early results gave the former Treasurer of the global oil multinational, Mobil Oil, lead ahead of three other major contestants.

While the nation awaits the final announcement of the presidential election results by the Independent National Electoral Commission (INEC), majority of state-by-state results already collated by INEC yesterday gave Tinubu unassailable lead.

In response, Nigerian equities rallied N261 billion in net capital gains yesterday, to push the market’s capitalisation to N30.40 trillion.

According to Bloomberg, five of 10 top-performing emerging-market bonds were Nigerian while sovereign-risk premium had narrowed by 104 basis points in three days.

“Nigerian bonds are posting some of the best gains in emerging markets as investors bet that ruling-party candidate Bola Tinubu, who’s taken an early lead in the nation’s presidential election tally, will offer reforms to pull Africa’s largest economy out of a fiscal mess,” Bloomberg reported.

Tinubu, a globally renowned accountant, is reputed for public finance reengineering, whose ingenuity and reforms reshaped Nigeria’s former capital, Lagos, as Africa’s fifth largest economy and one of the continent’s investment hub.

Group Executive Director, Investment Banking, Cordros Capital, Mr. Femi Ademola, said the continuing rally underlined market’s expectations that the next president would be “market-friendly”, a general euphemism for favourable economic policies.

He however added that investors were also responding to the year-end corporate results and expected dividend payouts.

“Our outlook for this week remains upbeat, as we believe buy interests will continue to drive bullish sentiments further,” analysts at SCM Capital stated in post-trading review yesterday.

With nearly four gainers to every loser yesterday, analysts at Afrinvest Securities said “improved sentiment” would drive further gains in the next trading session.

Recent rally built on perceived investors’ confidence in the Nigerian electioneering process as the Nigerian market bucked its known cycle of decline in pre-election year to record its third consecutive positive performance in 2022 with full-year average return of 19.98 per cent, equivalent to net capital gain of N4.455 trillion. Nigerian equities had closed 2021 with average return of 6.07 per cent, equivalent to net capital gains of N1.278 trillion. In the throes of the outbreak of COVID-19 pandemic in 2020, Nigerian equities had recorded average return of 50.03 per cent, representing net capital gains of N6.483 trillion.

Benchmark indices indicated average return of 0.86 per cent yesterday, pushing the average year-to-date return so far this year to 8.89 per cent. This implies that investors have earned about N2.49 trillion in net capital gains over the two-month period. Average return for February is 4.8 per cent.

The All Share Index (ASI)- the common value-based index that tracks all share prices at the Nigerian Exchange (NGX), closed yesterday at 55,806.26 points as against its year’s opening index of 51,251.06 points, representing an increase of 8.89 per cent. ASI opened Monday at 54,949.21 points. It had closed January 2023 at 53,238.67 points. The ASI had opened 2022 at 42,716.44 points.

Aggregate market value of all quoted equities also rose its year’s opening value of N27.915 trillion to close yesterday at N30.401 trillion, representing an increase of N2.486 trillion or 8.90 per cent. It opened Monday at N29.934 trillion. Equities’ value had closed January 2023 at N28.998 trillion, representing net capital gain of N1.08 trillion for the first month of the year. Aggregate market value of quoted equities opened 2022 at N22.297 trillion.

The perfect correlation in the movement of the ASI and aggregate market value underlined that the increase in market value was entirely due to share price appreciation, rather than primary market activities such as listing of new company, increase in number of shares or primary revaluation of shares.

There were 36 gainers against 10 losers yesterday at the NGX. MRS Oil Nigeria led the rally with the maximum allowable gain of 10 per cent to close at N36.85. Stanbic IBTC Holdings followed with a gain 9.88 per cent to close at N41.70 per share. C & I Leasing rallied by 9.64 per cent to close at N3.98  while McNichols and Oando appreciated by 9.09 per cent each to close at 72 kobo and N4.80 respectively.

On the negative side, Multiverse Mining and Exploration led the losers with a drop of 10 per cent to close at N3.96. CWG followed with a decline of 9.09 per cent to close at 90 kobo. Flour Mills of Nigeria  declined by 8.44 per cent  to close at N32. Chams Holding Company depreciated by 7.14 per cent to close at 26 kobo while R.T. Briscoe Nigeria declined by 3.57 per cent to close at 27 kobo per share.

The momentum of activities improved significantly as total turnover rose by 58.4 per cent to 237.174 million shares valued at N4.393 billion in 4,435 deals. Fidelity Bank topped the activity chart with 39.980 million shares valued at N201.971 million. Zenith Bank followed with 34.247 million shares worth N907.536 million. Oando traded 22.569 million shares valued at N109.096 million. Transnational Corporation traded 17.826 million shares valued at N23.260 million while Guaranty Trust Holding Company (GTCO) recorded 10.366 million shares worth N274.653 million.