This week is likely to be a pivotal week for Nigeria and to a larger extent the Nigerian Stock Market. We explore various reasons why we think this is going to be a pivotal week for the capital market.
End of a Period
This is the last week of the month of September and the end of the third quarter of the calendar year. Most companies will be closing their books for the period to allow for periodic preparation of interim results. This is also a pivotal period for most fund managers and portfolio investors who also need to declare portfolio returns at the end of the quarter. Based on this, it is likely that we could see significant movement in the All Share Index this week. For example, stocks gained a combined 1% in the last three days of September last year only to go on a 10 day losing streak making it one of the longest running losing streak for the index. Some analysts believed portfolio investors decided to dump stocks in anticipation of a global commodity glut. So, stocks may stage a rebound this week but don’t expect the bulls to remain next week.
President Buhari is expected to announce his cabinet this week after months of waiting. Investors have been waiting for this for months now considering its importance in shaping the economic direction of the country. The composition of his cabinet will be fully reviewed for their quality, records, past utterances etc. Whilst the list is not yet out rumours about already. A positive or negative sentiment towards his cabinet will most likely drive stocks higher or lower respectively as the day of announcement gets closer and will be even more evident after October 1st. Buhari has promised to announce his cabinet on or before September 30th 2015.
Independence Day Speech
President Buhari will also be the center of focus as he dishes out an independence day speech. Investors, analysts and entire country will be listening in to hear what he has to say about the future of the country and how he intends to shape it via strong economic reforms, fiscal reforms, security and job creation. If he remains silent on the economy like he mostly did in his swearing-in speech, then things could be awry for the markets.
US Government Shut Down
The United States Government is facing a shut down this week as the country’s congress faces a hotly contested vote on whether to defund Plant Parenthood Federation from a legislation that is expected to keep the government running beyond October 1. Certain factions of the republican party in the US are ready to shut down the government if a clause requiring the funding of the PPF is not expunged. This has already made the Speaker of the house John Boehner resign. Whilst this does not directly affect Nigeria, a shut down of the US government is bad for the world economy. If this happens then the shocks this will create on an already fragile world economy will certainly also affect Nigeria.