Naira gains as stocks lose in early trading following Tinubu’s win

In early trading on Wednesday, Nigeria’s equities market saw its first decline in weeks while the local currency (Naira) appreciated against the US dollar by 1.32percent following announcement of Bola Ahmed Tinubu as Nigeria’s President elect.

As at 12.24pm, the stock market was down by 0.72percent as the index reached new low of 55,406.45 points.

During the intra-day trading at the parallel market, naira was exchanging with the dollar at N755, which was stronger than N756 traded since last week.

“The market is calm and there was low demand for the greenback. Again, some traders were not operating because some of the bank branches are still closed,” one trader told BusinessDay on Wednesday. At the Investors and Exporters (I&E) forex market on Tuesday, Naira remained unchanged at N462.00 per dollar.

Tinubu, the presidential candidate of the ruling All Progressive Congress (APC) was declared winner of the 2023 presidential election conducted at the weekend by Mahmood Yakubu, the chairman of the Independent National Electoral Commission (INEC).

Tinubu most daunting task as Nigeria’s next President will be to pull the world’s poverty capital from the brink. Nigerians today contend with multidimensional poverty, insecurity, crippling inflation, and power shortages, among other constraints.

Tinubu is expected to also fast-track industrialisation and diversification, improve investment-to-GDP, grapple with underperforming sectors and deliver a more competitive currency, and actual reform implementation.

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The nation’s equities market had gained about N1.403trillion in February, the nation’s presidential election month despite that general elections typically bring about uncertainty and markets do not like uncertainty. The remarkable leap in stocks value came as investors continued to position themselves for dividend income amid full year 2022 results releases by companies.

“As measured by market breadth, investors’ sentiment strengthened from Monday’s session to settle at 3.6x. Yesterday’s session showed increased investor interest as short-term sentiments remain bullish owing to improved economic prospects indicated by the recently released Q4-2022 GDP report by the National Bureau of Statistics (NBS). However, with uncertainty surrounding the outcome of the 2023 elections, the medium-term direction of the equities market remains highly speculative.

“In addition, the market has rallied significantly in consecutive months, raising fears of an over-extended market. We expect sustained bullish sentiments as we anticipate downbeat money market yields till second-quarter (Q2) 2023. Technical indicators point to a more significant downside potential for equities. We consider buying equities a ‘riskier’ rather than a ‘wrong’ strategy while favouring reducing portfolio exposures as the ideal approach. Equity stakeholders can look to book profits off stocks that have crossed the overbought region,” according to Lagos-based Research analysts at United Capital Plc in their March 1 note to investors.

Tinubu, the National Leader of APC won in 12 states out of the 36 States of the Federation but notably lost in Lagos State (where he governed for eight years between 1999 and 2007) to Peter Obi the presidential candidate of the Labour Party (LP).

Bola Tinubu, the presidential candidate of the ruling All Progressive Congress (APC) has won the 2023 election conducted at the weekend. He polled 8, 794, 726 to defeat his closest rival, Atiku Abubakar, candidate of the main opposition Peoples Democratic Party (PDP) who scored 6,984, 520 and Peter Obi, the presidential candidate of the Labour Party (LP) who garnered, 6,101,533 while Rabiu Kwankwaso of New Nigerian Peoples Party (NNPP) got 1,496,687.