For the first time since the return to democratic rule in 1999, the Nigerian stock market is not in negative territory in an election year.
Nigerian stocks declined every month bar one during the last election in 2019 before closing the year at a loss of 14.6 percent. In 2015, the year President Muhammadu Buhari remarkably defeated incumbent President Goodluck Jonathan, the market declined by 17 percent with the losing streak starting as early as January.
This year, Nigeria will yet again head to the polls with Buhari’s eight-year rule coming to an end, but the stock market has not performed the usual way.
Nigerian stocks were up 4.98 percent as at February 17, according to data from the Nigerian Exchange Limited.
The stock market has not dipped this year because foreign investors who are first to sell off their stock holdings in Nigeria when elections are around the corner have fled the country due to more teething problems like the foreign exchange shortage.
The exit by foreign investors has paved the way for locals who now constitute the bulk of trading in the market.
Foreign investors’ participation in the market in 2022 fell to the lowest since data was being tracked in 2007.
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While local investors accounted for 83.68 percent of total transactions in 2022, foreigners accounted for only 16.32 percent, which saw them invest N195.76 billion in the whole of 2022, about 10 percent of what was invested in 2014.
“The foreign exchange shortage in Nigeria remains the elephant in the room and that has kept foreign investors at bay,” a London-based fund manager said. “You could also see no post-election bounce for the stock and bond markets this year if there’s no clarity about the exchange rate.”
Several investors including economists at the World Bank and International Monetary Fund have blamed Nigeria’s foreign exchange policy for blocking foreign investments into Nigeria.
