Stocks listed on the Nigerian Stock Exchange (NSE) fell the most in dollar terms when compared with global peers in the last four years, according to Bloomberg data.
The stocks are half their value today, compared to May 2015 when President Muhammadu Buhari was sworn into office as Nigeria’s fourth democratically-elected leader after the country’s return to civilian rule in 1999.
Buhari assumed office on May 29, 2015, after defeating then incumbent Goodluck Jonathan, becoming the first candidate to beat a seating president in Africa’s largest economy.
Almost four years into his rule, Nigerian stocks are down 49.55 percent (in dollar terms) after the close of business, Friday, at the Lagos bourse, while those in the frontier markets shed 5.93 percent over the same period.
However, emerging-market stocks have since then gained 2.63 percent, while those trading in the developed markets surged 12.79 percent.
“The present government is to a large extent responsible for the downward performance,” Paul Aluko, equity research analyst at MBC Securities Limited, said. “An administration without clear economic blueprint will always result in negative performance of the market.”
Analysts at FBN Quest, the research arm of FBN Holdings, said “the stronger performance of Nairobi may be explained by a ‘sell Nigeria, buy Kenya’ trade that we understand to have been popular this year with the offshore community”.
This is despite a market rout which bedevilled emerging markets last year, largely occasioned by reversal of capital flows by foreign portfolio investors seeking to take advantage of investment opportunities in the United States as the country’s Fed Reserve raised its interest rates four times, prompting foreign investors to pull out over N600 billion from NSE in the same period.
A loss of 17.81 percent in 2018 added to the woes of investors with exposure to Nigeria.
With this in mind, analysts at Citigroup, one of the world’s largest banks, forecast an imminent rally if President Buhari loses this Saturday’s election where he will contend with Atiku Abubakar, a business mogul and former vice president, Kingsley Moghalu, former deputy governor of the Central Bank of Nigeria (CBN), and other candidates.
If the forthcoming election is devoid of post-election crisis and Atiku wins, Aluko said the market would react more positively on the back of “expected economic recovery and capabilities of Atiku/Obi”.
Furthermore, a Bloomberg report indicates that some offshore investors would prefer a government by Atiku, even as uncertainties surround his plans to privatise the Nigerian National Petroleum Corporation (NNPC) and float the naira.
Despite Nigerian stocks’ poor performance during this period, the year-to-date return of the NSE turned positive last week to stand at 1.12 percent Monday after recording a seven-day gaining streak, underperforming South African and Kenyan equities that posted 1.51 percent and 7.98 percent YTD returns, respectively.