The Nigerian Stock Market: Has Tinubu’s Election impacted the Market Negatively?

On 25th February, 2023, Nigerians went to the polls to elect a new President, that will take over from Major General Muhammadu Buhari (Rtd.).

The top contenders for the seat were Peter Obi of the Labour Party (LP), Ahmed Bola Tinubu of the All Progressives Congress (APC) and Atiku Abubakar of the People’s Democratic Party (PDP).

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In the early hours of Wednesday 1st March, 2023, the Independent National Electoral Commission (INEC) declared Ahmed Bola Tinubu, the presidential candidate of the All Progressives congress at the winner of Presidential election.

The candidates of the Labour Party and the People’s Democratic Party has since filed petitions before the Presidential Election Petitions Tribunal, disputed the election result, and hearing is expected to commence on Tuesday May 30, 2023, a day after Tinubu has been sworn into office.

A lot of people had looked to the Nigerian Stock Market for indications on how the markets and investors reacted to the election of the former Governor of Lagos State.

Ahead of the handover on Monday 29th May, 2023, Analysts at Investogist looked at the performance of The Nigerian Exchange’s (NGX) All-Share Index, NGX’s Major Indices, and the 8 most capitalized companies on the NGX on 24th February (the last trading day before the Presidential election), the 1st of March (the day INEC announced Tinubu as President-elect) and 26th May (the last trading day before Tinubu takes over as President).

The NGX All-Share Index

The All-Share Index (ASI) tracks the general market movement of all listed equities on Nigerian Exchange, including those listed on the Growth Board, regardless of capitalization.

On 24th February, 2023, a day before the Presidential election, the ASI closed at 54,949.21 points, having gained 0.55% on the day, being Friday.

On 1st March, 2023, the day INEC announced Tinubu as the winner of the Presidential election, the ASI halted a 5-day bullish run to lose 0.5% to close at 55,508.61. The loss on the day was attributable to loses in Airtel Africa (-5.3%), Eco Bank (-7.7%) and Lafarge Africa (-1.5%).

Between the 24th of February and 1st of March, the ASI had gained 559.40 points, a 1.02% increase.

On 26th May, the last trading day before Bola Tinubu is sworn-in as the President of the Federal Republic of Nigeria, the ASI again retreated by 0.2% to 52,973.88 points.

Between the date of announcement and the eve of swearing in, the ASI has declined by 4.57%.

The Major NGX Indices

A review of the top 5 indices on the Nigerian Exchange showed a similar pattern between 24th February and 1st March, but a mixed performance between 1st March and 26th May.

Between 24th February and 1st March, all the five indices advanced;

1. NGX Banking Index advanced by 2.12% from 456.85 points to 466.55 points.
2. NGX Industrial Index advanced by 1.40% from 2,480.93 to 2,515.76.
3. NGX Consumer Goods Index advanced by 4.83% from 658.28 to 690.09.
4. NGX Oil & Gas Index advanced by 2.62% from 555.15 to 569.72.
5. NGX Insurance Index advanced by 1.59% from 177.15 to 179.97.

Between 1st March and 26th May, there were mixed performances by the Indices;

1. NGX Banking Index advanced by 6.31% from 466.55 points to 495.99 points.
2. NGX Industrial Index declined by 6.59% from 2,515.76 to 2,349.92.
3. NGX Consumer Goods Index advanced by 13.06% from 690.09 to 780.21.
4. NGX Oil & Gas Index advanced by 1.07% from 569.72 to 563.65.
5. NGX Insurance Index advanced by 16.47% from 179.97 to 209.62.

The Performance of the 8 most capitalized Companies on the NGX

A review of the 8 most capitalized companies on the NGX; MTN Nigeria, Dangote Cement, Airtel Africa, BUA Cement, BUA Foods, Nestle Nigeria, Zenith Bank and Guaranty Trust Holding Company shows that all but Dangote Cement, Airtel Africa, and BUA Cement advanced between 24th February and 1st March.

The same companies depreciated in price between 1st March and 26th May.

Conclusion

Investogist reviewed the performance of the NGX All-Share Index over the same period in 2021 and 2020, and identified similar performance between the February and May period under review, with only 2022 going in the opposite direction.

• 2022: The NGX ASI advanced by 0.44% in the Feb-Mar period under review, and advanced by 14.41% between the Mar-May period. In the Feb-May period, it advanced by 13.91%.
• 2021: The NGX ASI declined by 0.72% in the Feb-Mar period under review, and declined by 4.88% between the Mar-May period. In the Feb-May period, it declined by 4.19%.
• 2020: The NGX ASI declined by 4.53% in the Feb-Mar period under review, and declined by 6.56% between the Mar-May period. In the Feb-May period, it declined by 2.13%.

In 2023, between February 24th and May 26th, the NGX ASI declined by 4.57%, in 2022 over similar period, it advanced by 13.91%.

In 2021, over the period under review, it declined by 4.19% and in 2020, it declined by 2.13%.

The data analyzed can be interpreted to say that the market and investors had not reacted to the emergence of Bola Tinubu as the President of Nigeria.

Nnamdi Maduakor

Nnamdi Maduakor is a Writer, Investor and Entrepreneur