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Markets

How Investors could benefit from Buhari’s second term bid

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While the President’s admission of his intent to run in the 2019 elections could be a cause for concern to investors, there could be significant upside if he emerges as the winner of the presidential election.

See associated risk of Buhari running for Presidency again.

Less Uncertainty in the system

News of the President contesting lowers the amount of uncertainty in the polity. Had he declined to seek re-election, there would have been a keen power struggle in the All Progressives Congress (APC) among the various participants who had expressed subtle interests in running.

Some of these hopefuls are already in the corridors of power and had Buhari decided to not to seek re-election, the competition would have been fierce and might have derailed the candidates’ focus from running the affairs of the country, thereby causing upheavals in governance.

Also, political uncertainty leads to major investment decisions being put on hold till after the elections. This would have lowered the number of potential new jobs that would have been created.

Continuity

Even though the President would be expected to make changes in his cabinet, his winning the election would lead to continuity in terms of policy implementation. A new administration would need at least the better part of a year to settle down and get to work and could decide to reverse key decisions taken by the current government.

Boost to the economy from election spending

President Buhari’s decision to contest the elections would lead to an increase in the quantum of funds that would be dedicated to campaign finance.This runs into tens of billions of naira, which in turn has a positive trickle-down effect on the economy.

While the President is known for his spartan nature, members of the party across all tiers have vested interests in ensuring that the ruling APC retains the Presidency. Contestants on the other platforms seeking to unseat the President would have to reach deeper into their pockets which in the long run, would improve money circulation in the country.

Foreign Exchange stability

Despite criticism for refusing to devalue the currency in the face of a drop in dollar revenue, the Buhari administration has since gotten its foreign exchange policy right by keeping supply stable. Crude oil price has also rebounded to $70 a barrel and is predicted to remain within the $50-$70 range in the medium term.

Availability of foreign exchange gives foreign investors the confidence to move into the market. Last year’s gains on the Nigerian Stock Exchange were largely driven by the activities of foreign investors. If the current peace in the Niger Delta is sustained, stability in the exchange rate could remain.

Indigenous firms come first

The administration has also shown a preference for policies that favour local industries. This could also continue in the event of his winning a second term. The ban on imported palm oil, for example, has led to a huge spike in demand for local firms like Okomu Oil and Presco Plc.

The Anchors Borrowers Programme and Presidential Fertilizer Initiative have in some ways improved productivity in the Agric sector.

Security will remain on the front burner

While the administration has stumbled in its economic management, it has scored decent marks when it comes to security. The North East and the Niger Delta have become much more peaceful. The government recently obtained approval for a $1 billion withdrawal from the Excess Crude Account (ECA) to buy military equipment. This indicates that security will remain a priority on Buhari’s agenda.

Relative security will keep investors within the country and encourage others to invest.

Infrastructure drive will remain

The Buhari government has embarked on several large ticket infrastructure projects which should come to fruition in the next 4 years. A N100 billion Sukuk bond was raised for the rehabilitation of roads. The Lagos-Ibadan railway project is billed to be completed in the first quarter of 2019.

Jaiz bank

Modern infrastructure will help in facilitating the ease of doing business and as well as lower operating costs for companies.

Fuel prices could remain stable

The government has largely resisted an increase in pump price, partly due to the political backlash that could follow, as well as the President’s belief that the vast majority of Nigerians would feel the pinch of an increase. The NNPC has thus preferred to call the current subsidy an under recovery.

While an increase in both pump prices and electricity tariffs are almost inevitable after the elections, the government seems bent on delaying the increase and cushioning the impact. Possible price increases could be modest.

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training.He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE).He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy.You can contact him via [email protected]

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Markets

Bullish dominance in the NGX Banking Index

The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25.

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gtbank, stock market, Bulls dominate Nigerian bourse ASI up 0.74%, Investors gain N77 billion., Crude oil bulls lose steam, as COVID-19 cases hit record high

The NGX Banking Index made a bullish recovery at the end of yesterday’s trading session with an increase of +1.11%, pushing the index points to 354.25. There were 5 profits opposing 5 losses, but the magnitude of the gainers pushed the Banking Index into the green.

Union Bank led the gainers with a profit of +0.45, pushing its price upwards from N4.95 to N5.40.

Zenith Bank came second amongst the gainers with a profit of +1.14%, posting N22.20 from the previous day’s close of N21.95.

Guaranty Trust Bank also closed in profits with an increase of +0.86%, leaving its price at N29.40 from its previous price of N29.00. Sterling Bank was also part of the gainers with a profit of +0.63% putting its price at N1.60 from its previous close of N1.58.

Access Bank made profits of 0.62%, pushing its prices to N8.15 from N8.10.

Wema Bank was the biggest loser at the end of yesterday’s trading session as it made losses of -4.92%, leaving its price at N0.58 from N0.61.

Jaiz Bank also made losses of -3.23%, pushing its closing price to N0.63 from N0.62 obtained the previous day.

Ecobank joined the losers, posting a loss of -1.89% which put its price at N5.20 from its previous price of N5.30.

Fidelity Bank followed with a loss of -0.90%, putting its price at N2.24 from N2.22. UBA also posted a loss of -0.69%, pushing its price from N7.25 to N7.20.

Outlook

  • Market sentiment tends bullish as the magnitude of gainers outweighed the losers despite the 5 gainers and 5 losers held at the end of the trading session.
  • Nairametrics advises cautious buying amid growing uncertainties.

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Markets

Union Bank, LINKASSURE push NGX ASI into recovery

The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM.

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Nigerian stock exchange market made a bullish recovery on the last day of the week’s trading session. This surge was bolstered by gains made by UBN and LINKASSURE amongst others. The All-Share Index increased by +0.21% to close at 39,198.75 from 39,114.73.

  • Nigerian Stock Exchange market value currently stands at N20.48 trillion. Its Year-to-Date (YTD) returns currently stand at -2.66%.
  • The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM, showing a hint of consolation.

Top gainers

  1. LINKASSURE up +9.25% to close at N0.69
  2. JOHNHOLT up +9.26% to close at N59
  3. UBN up +9.09% to close at N5.40
  4. ROYALEX up +8.33% to close at N0.65
  5. CHIPLC up +8.33% to close at N0.39

Top losers

  1. NEM down -9.50% to close at N1.81
  2. COURTVILLE down -9.09% to close at N0.20
  3. SUNUASSUR down -8.47% to close at N0.54
  4. INITSPLC down -6.98% to close at N0.40
  5. ETERNA down -6.89% to close at N5.81

Outlook

The market recovered from a week-long loss as it posts profit at the end of the trading session.

  • Market sentiments tend toward bullish momentum as the NGX ASI closes with 25 Gainers and 16 losers.
  • Nairametrics however, advises cautious buying in this era of growing uncertainties.

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