The announcement of President Buhari as winner of the hotly contested 2015 election ushered in a gusty wind of ‘Bull-hari’ which saw Nigerian stocks gain for 10 straight days. That wind seems to have given way for a hurricane that has now seen Nigerian stocks lose about N2.2 trillion since President Buhari was sworn in May 29, 2015.
The All Share Index began the presidents reign on a bearish note with the market capitalization closing at N11,568,517,548,850. As at close of business December 14, 2015 market capitalization stood at N9,344,846,308,510. Market cap closed at N9,415,813,600,000 at the end of November 2015. Compared to when Goodluck Jonathan was still president, Market Capitalization was up N331 billion by the time the former president handed over.
The All Share Index has also taken a huge dip since Buhari got elected nose diving from 34,310.37 points to 27,617.45 points at the end of November. The index is currently on a year to date drop of about 20% compared to -1% when the president was sworn in.
Despite the fall in oil prices being a crucial factor in the fall of stocks, the economy is firmly Buhari’s and most investors will allude to the fact that his decisions has had its own impact on the performance of stocks. The CBN with the support of his Government has issued a rash of policies that has contributed in no small measure to the decline in Foreign Portfolio Investments (FPI) into the country. The Nigerian Stock Exchange in its October FPI report revealed that foreign transactions on the bourse had dropped by about 65% when compared to October 2014. Analysts believe this drop is a major factor in the sell-offs that has continued to hit the stock market.
Apart from the CBN policies, the fall in share prices also date back to months of uncertainty following the president’s decision not to provide an economic direction for the country. For months the investing world was left in the dark with no policy pronouncement from the newly elected government. The cabinet was only just sworn in last month after 6 months of being elected.
Some analysts also opine that the anti corruption crusade in the country has basically halted the flow of cash within the economy as people who usually have free cash no longer do and as such resulted to selling liquid assets such as stocks. The Bureau of Statistics still reported that growth in National Disposable income still grew at a slower rate in the second quarter of 2015 when compared to the same period in 2014.
The stock market has more often than not ended the last month of the year on a bullish note. This trend is likely to be broken this year as investors expect more losses as the year draws closer. The All Share Index is already on a week to date loss of about 2.35% as at Monday 14, 2015 and could slide even further.