BusinessDay

Market stakeholders allay investors fears ahead of elections

As the campaign for the 2023 Presidential Election is gaining momentum, many investors have expressed fears that the election period might plunge the securities markets in Nigeria into volatility.

But market analysts have debunked the claim saying there was nothing to worry about as long as investors take appropriate decision during the period.

Commenting on the issue, a member of the Governing Council of Chartered Institute of Stockbrokers (CIS) and Group Managing Director, Futureview Group, Elizabeth Ebi, explained that the upcoming presidential election would not automatically translate to loss of money in the stock market if investors take appropriate investment decision.

According to her, volatility is part of every stock market as there cannot be transaction without buyers and sellers.

Ebi noted that investors should not perceive investment during the election period as a risk, rather, they should base it on objective analysis with sound advice of their stockbrokers.

“There is always a tendency for investors to be apprehensive when presidential election is approaching. Risk averse investors would dumb shares. But this ought not be so. This is a period that investors should step back. They should put their personal emotion aside and make an objective analysis of the entire situation, especially how investment at that period can affect their personal finance.

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“Whoever wins the presidential election will have his economic blueprint to implement. They know that the stock market is a barometer for the economy. The market is always an avenue for trade off of risk and return. Investors should contact their stockbrokers at every moment of investment decision. There is no time that investors cannot make money from the stock market. It is a matter of investment strategy,” said Ebi.

A renowned stock market analyst and Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka who advocated cautious investment, attributed the fears partly to threat of insecurity in the country. The financial engineer, argued that it was safe to invest in the country during election period as long as the security threat did not go beyond the current situation.

“The best way is to ask thus: are we likely to have general elections in 2023? If the answer is yes, then it is safe to continue to invest in Nigeria. If the answer is no, then further investment in Nigeria could be threatened by failure of elections and transition. At this time, the chance that 2023 general elections will hold, and there will be transition, is more than 50percent.

“The reason around this figure is the threat from insecurity around the country. And so, it is safe to continue to invest in Nigeria, for as long as the security threat does not go beyond what we are already familiar with. So, invest in the market, but keep your eyes on issues around security and sincerity of government. In summary, invest cautiously,” said Olayinka.

Other analysts maintained that every investor should avert herd instinct whereby they invest just because others are investing.

“Investment is an art and science. Investment decision either before, during or after a presidential election should not be based on emotion or an act of copycat. It has to be a rational decision based on investment advice by a certified stockbroker or other investment adviser. Unfortunately, many investors base their decision on self-analysis even when they lack the technical know-how. In such situations, the investors stand the risk of losing money,” said an analyst.

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