- Stock Market Declines Amid Sell Off
The Nigerian Stock Exchange declined on Monday following the decision of the Independent Electoral Commission (INEC) to postpone the general elections.
Economic experts had on Sunday predicted that the equities market would react negatively to the postponement of the elections as investors are likely to pull back due to the surge in uncertainties.
The All Share Index declined by 525.13 basis points to close at 32,190.07 bps on Monday, while the market capitalisation of listed equities declined from the N12.2 trillion recorded on Friday before the general elections were postponed to N12.004 trillion on Monday. Representing a decline of 1.61 per cent or N196 billion.
The banking sector top losers’ list, dropping 3.21 per cent, while the oil and gas sector followed with a 2.92 per cent decline.
Andrew Alli, a former Chief Executive Officer of African Finance Corporation, told Bloomberg in an email that the personal costs of the postponement would be high but if the rescheduled elections are properly conducted, it would minimize damages.
He said, “But as long as it doesn’t portend some major election dispute after the voting, I don’t think the ultimate effect will be that major.”
“People will be more apprehensive because stock markets are allergic to uncertainties,” said Mr Bismarck Rewane, the Managing Director and Chief Executive Officer, Financial Derivatives Company Limited.
He said, “The uncertainty premium has been increased because we have another unknown variable – we do not know whether the elections will hold again next Saturday and what the outcome will be even if they hold.”
“Markets are very sensitive to unknowns and uncertainties. The initial reaction on Monday (today) will be negative because of the uncertainty that has been introduced, but after a while, the market will factor in that uncertainty and come back to normal. The market will normalise by Wednesday.”
