New Telegraph

Market outlook positive amid election uncertainties

Despite uncertainty surrounding the outcome of the presidential election next month, the overall oulook of stock market remains positive. Rhoda Ogunseye writes

Depending on expectations, the stock market take unpredictable shape on build up to а national election. Annoncement on election postponement could generate a negative reaction even as the market may still recover quickly.


The Managing Director/ Chief Economist at Analysts Data Service and Resources Limited, Dr Afolabi Olowookere, while speaking on the outlook of the stock market in 2023, disclosed that while recent evidence suggests the market performance during pre and post elections comes out negative, it was expected that the market might close in the negative territory at the end of the year. “The past may not necessarily be the one we might see in future. In the last three years of election, the market had closed in the negative and so looking at it, stock market returns might likely close at -16 per cent at the end of the year and this will be centered on factors like uncertainties around the outcome of the elections, low capital inflows and rising inflation,” Olowookere said. He said capital market may rise following a successful election, but delay in announcing the winner could have a negative impact on the market. He added that governorship election had more negative impact on the market than the presidential election. “So if there is a bad election we will see the market come down; but if it is a succesful election, the winners announced on times and there are no crisis, the market will pick up. We are also saying that, don’t look at the presidential election alone, look at the gubernatorial elections, where you have so many persons from different places, 36 or 35 of them or 28 of them, that cover more ground, more domestic mobilisation and that have larger impact them the presidential election,” he explained.

Electoral impacts

On year-to-date returns in the year of elections, he said: “In 1999, the market dipped -7·2 per cent; In 2003 the market did 65.8 per cent in return; In 2007 the market did 74.7 per cent due to huge investment in Nigeria’s stock market. However, in the last threeyear of elections, it has been negative. In 2011 it was -16.3 per cent;2015 it was -17.4 per cent due to global crude oil crisis; 2019 it was 14.6 per cent.” Olowookere said the market may close negative in this election year. “If we can project conveniently the future based on the past, we will say that in the year of electon there is likelihood that the Market will be down. “Even do it has shown that, build up to the election, thing can go up, sucessful election things can go up, but most likely so. It is possible you will see something like -16 per cent December base line. Best case scenario, we may have something better. We may have -20 per cent but if we can judge now, by what happened before, the market may not do very well at the end of this year due to: inflation; monetary tightening stance of the Central Bank of Nigeria (CBN); high borrowing; debt versus equities (most money may go to the debt market now); crowding out effect (uncertainties about the elections have caused low capital inflows). “All these factors may make the Returns of the market be lower this year than last year,” he elaborated.

The gladiators

On his part, Charles Fakroga, a stockbroker and NGX trainer said: “What we know is that the gladiators, the four or three of them, are market friendly. “We have seen Bola Ahmed Tinubu, the All Progressives Congress (APC) presidential flagbarer attending our programes, that is the Chartered Institute of Stock Brokers (CIS). “We have seen the Labour Party presidential candidate, Peter Obi, attending programmes, we’ve even seen the former Vice-President, Atiku Abubakar, candidate of Peoples Democratic Party (PDP) attending our programes and of course the Presidential Candidate of the New Nigeria Peoples Party (NNPP), Senator Rabiu Musa Kwankwaso. “And you can see all the political gladiators are market friendly and they are also private driven people and so they understand the dynamics of a private driven economy. “So we know that they are going to support the market. Leadership is key in any capital market, so we known that any of them that will win by the grace of God, the market will be impacted we will see the positive impact in the market.”


So far, the Nigerian equities market has continued to defy the norms to pitch on the bullish territory as the Nigerian Exchange Limited (NGX) trailing 12-month returns hit N4.28 trillion as of January 5, 2023 just as the general elections approach. According to data from the NGX, the All-Share Index rose by 17 per cent, moving from 43,476.75 points to 50,868.52 between January 5, 2022 and January 5, 2023. This growth has been reflected in the market capitalisation of equities, which increased from N23.43 trillion to N27.71 trillion within the same period, a rise of N4.28 trillion. Market sentiment on the floor of the Exchange as trading closed on Thursday was positive, with 20 firms seeing gains in their share price compared to 16 decliners.

This may suggest that investors are confident in the market and are willing to take on risks in order to potentially see returns. Daily trading volume saw a decrease of 47.80 per cent on Thursday January 5, 2023, with 138.72 million shares valued at N1.83bn being exchanged in 4,156 deals. While this may seem like a significant drop, it is important to note that this is still a significant number of shares being traded, and the decrease may be due to a variety of factors such as market conditions or investor behavior.

The top five gainers were John Holt Plc, Honeywell Flour Mills Plc, CWG Plc, UAC of Nigeria Plc, and Nigerian Breweries Plc. These companies saw the largest percentage increases in their share price, suggesting that they are currently in high demand among investors. Financial services stocks dominated market turnover, making up 74.41 per cent of the total. This sector has consistently been a major player in the Nigerian stock market and its continued dominance is not surprising. BUA Cement Plc was the most traded stock by volume and value, with 101.65 million shares worth N9.85 billion being exchanged in 101 deals. This company has a strong presence in the Nigerian market and is a major player in the construction and infrastructure sectors.

Sectoral performance was largely positive on Thursday, with the NGX Consumer Goods, NGX Banking, and NGX Oil and Gas Indices all seeing gains of 1.33 per cent, 0.88 per cent, and 0.09 per cent respectively. The NGX Industrial Index remained flat, while the NGX Insurance index saw a decline of 0.97 per cent. It is worth noting that the insurance sector has been more volatile than other sectors in the past year, so a decline is not necessarily a cause for concern.

Last line

Overall, the Nigerian stock market has shown substantial growth over the past year and has a positive outlook. While there was a decrease in daily trading volume on Thursday, this does not necessarily indicate a decline in the market as a whole. It will be important to monitor market performance in the coming days and weeks to better understand overall market trends. It is also worth noting that the volume on the exchange has slowed in recent days due to expectations surrounding election season, which may be affecting market activity.

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