By Jeph Ajobaju, Chief Copy Editor
A mixed reaction came out of Nigeria’s stock market on February 27 after the Independent National Electoral Commission (INEC) announced the reelection of Muhammadu Buhari as president for another four years.
On the campaign trail, he promised to progress his record on anti-graft and security.
His main challenger, Atiku Abubakar, pledged to sell off state assets, float the naira, and diversify the economy from oil.
Many were skeptical about Atiku and cited his reputation for corruption, but some foreign investors preferred a government led by him, being a businessman.
Buhari won 56 per cent of the vote and Atiku 41 per cent. Atiku says he will mount a court challenge to reverse his defeat.
After news broke of the election result, Nigeria’s long-dated bonds denominated in dollar and traded offshore rose as much as 0.8 cents in the dollar to extend a more than 10 cents rally since the beginning of 2019.
But stocks fell to a one-week low in early trades, Reuters reports.
The stock index, which opened up 0.12 per cent, turned red to fall 0.18 per cent, its lowest in one-week, on low volumes after mixed trading in the past week because of the election.
Ten-year bond yield fell to its lowest in six months as stocks went south.
According to Reuters, the benchmark 2028 bond yield dropped to 14.3 per cent, its lowest since August 2018, from 14.5 per cent the previous day.
It was quoted at 14.75 per cent on February 22, a day before the vote.
Yields on government bonds have been falling since December as investors bought debt. Traders said they had seen some buying from offshore funds on February 27.
Analysts had predicted a stock market rally this year if the election passed without violence or other problems. Shares gained on February 25.
To shore up the economy, Abuja has signed an export-financing agreement with investment partners to inject $30 billion from products manufactured in Nigeria and sold abroad.
But it remains to be seen how that would indeed help stem losses in Nigerian stocks which have fallen more than any other in the world in dollar terms since Buhari came to power in May 2015.
In the run up to the vote on February 23, analysts at Citigroup said Nigeria’s stock market might rally only if Buhari lost.
The $30 billion deal on the Made in Nigeria for Exports project was signed on February 10 with the African Export-Import Bank, Africa Finance Corp., the African Development Bank, Bank of Industry and Nigerian Sovereign Investment Authority.
Nigeria, Africa’s biggest oil producer and largest economy, seeks to increase manufacturing share of GDP to 20 per cent, generate $30 billion in annual export earnings, and create 1.5 million jobs in the next six years.
Nigeria SEZ Investment Co., set up to run the project, will start off a pilot phase with special economic zones in Enyimba Economic City in Abia State, Funtua Cotton Cluster in Kastina, and Lekki Model Industrial Park in Lagos.
Nigeria’s economy grew in 2018 at its fastest pace since 2016.
GDP grew 1.93 per cent in 2018, up from 0.82 per cent in 2017 and just shy of 2 per cent projection.
It grew 2.4 per cent in the fourth quarter, the National Bureau of Statistics (NBS) announced on February 12.
