I saw the tweet first on Dolapo Oni’s handle (@Dolarpo). “Green Tie Signals Hold.” By the way, Dolapo Oni is the Africa focused energy analyst at Ecobank. He was referring to the tie that Godwin Emefiele, the governor of Nigeria’s central bank wore as he was about to announce the decision of the Monetary Policy Committee on interest rates after two days of deliberation.
Not surprisingly, Pabina Yinkere (@pbyinkere), Head of Research at Vetiva Capital was sceptical that any man, just by looking at the colour of Emefiele’s tie, could determine the outcome of two days of heated deliberation by the egg heads in the monetary policy committee on such an important decision as the Monetary Policy Rate (MPR). Sceptically, Pabina tweeted in pidgin “Una still dey this tie colour issue.” In other words doubting the efficacy of using the colour of Emefiele’s tie to determine what decision the monetary policy committee arrived at.
But Dolapo is apparently not a lonely proponent of the Green Tie Theory. John Ashbourne (@JohnAshbourne), emerging market analyst, with a focus on China and Africa tweeted “It’s as good a system as any” endorsing Dolapo’s Green Tie theory.
And Dolapo was right when after the long analysis of the Nigerian and global economy, Emefiele came around to doing exactly what Dolapo had said he would do just by looking at the colour of tie he was wearing. Emefiele announced the MPC’s decision to retain interest rates at 14 percent, Cash Reserve Ratio at 22.50 percent and the Liquidity Ratio at 30 percent. It was a HOLD decision just as Dolapo had predicted with the help of Emefiele’s tie.
Though it must be admitted that most economists and analysts had expected that the MPC would vote to retain the status quo considering the fact that the National Bureau of Statistics (NBS) had just announced that the country had dropped deeper into a recession the Monday the MPC started its meeting.
Raising interest rates would have made an already bad situation even worse despite the fact that inflation is already at an 11 year high. It was obvious that the MPC was in a difficult position and therefore needed to just play safe. Earlier on, even before Emefiele appeared to read the decision of the MPC, Dolapo had tweeted at me saying he expected that the decision would be a “Hold.” The colour of the Emefiele’s tie may just have been the icing on the cake.
But then Pabina asked a very vital question, even as Dolapo celebrated the validation of his Green Tie Theory. “What colour should we watch out for when he decides to start cutting rates?” Dolapo is yet to answer the question as at the time I started writing my article. Though my colleague in the office says that the “green tie” has been the governor’s signature dressing since his appointment.
But digging around the internet showed that superstitions around the financial markets are not just restricted to Nigeria or Nigerians. Even on Wall Street, superstition goes beyond the colour of a tie. I discovered that on Wall Street, some traders believe that a new moon is good for the market while a full moon is bad for the market.
There also traders that believe the best time to sell down your stock positions is on the first day of the Jewish New Year and buy them back on the “Day of Atonement” also called Yom Kipur. There is also the belief that any time you start seeing big buildings going up in the city, and then it is time to sell down your stock positions as this indicates that the stock market is going to crash soon.
Basically superstitions about market performance are not restricted to the Nigerian financial market. It is a global phenomenon. They are not subject to scientific beliefs. They are just things that people believe. Sometimes it works, and sometimes it fails. But you will be making a big mistake when it becomes the basis for making an investment decisions. However, they are fun.
Nonetheless the Green Tie theory worked on this occasion and I will definitely be watching out for the colour of the governor’s tie at the next MPC meeting.
Anthony Osae-Brown
