Election Postponement: Equities Market to Suffer From Delay Poll

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  • Election Postponement: Equities Market to Suffer From Delay Poll

The Nigerian Stock Exchange rebounded slightly last week following investors renewed interest in the stock market.

The market capitalisation of listed equities climbed from N11 trillion to N12.20 trillion on Fridays as investors rushed to position for a post-election rally.

Experts, however, believed the election postponement would weigh on the stock market as the uncertainty surrounding the general elections just increased.

“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.”

Mr Rotimi Fakayejo, the Chief Executive Officer, Enterprise Stockbrokers Plc, said it is normal for investors to express their disappointment about the postponement.

He added, “It is going to cast doubt on the outcome until the elections take place and they run smoothly. That is when people will start having confidence in the market again.

“So, it is most likely that in the first two days of the week, we are going to see the market going south. Thereafter, there may just be some stability and further correction after that.”

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]; Tel: +2347065163489.

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