President Bola Ahmed Tinubu's policy direction received a warm reception from the Nigerian stock market, resulting in a significant boost.
The market witnessed intense bargain-hunting, leading to a net capital gain of N1.51 trillion, marking its highest single-day gain in two and a half years. In response to the president's policy announcements, the Nigerian currency, the naira, also experienced a marginal gain.
The All Share Index (ASI), which serves as the benchmark index for the Nigerian stock market, recorded an average return of 5.23%, its highest gain since November 12, 2020. The ASI's increase, equivalent to N1.51 trillion, was driven by the first trading day following President Tinubu's inauguration address. This surge pushed the year-to-date return for Nigerian equities to 8.77%, placing Nigeria among the top-performing stock markets globally.
The aggregate market value of all quoted equities exceeded the N30 trillion mark, reaching N30.349 trillion, compared to N28.844 trillion recorded over the weekend.
Trading activity soared by 133.4%, with a turnover of 1.08 billion shares valued at N15.8 billion in 9,916 deals, compared to 461.78 million shares worth N7.68 billion in 6,520 deals on the previous trading day.
A sectoral analysis revealed a positive sentiment across the market, with the NGX Banking Index rising by 8.2%, the NGX Consumer Goods Index rallying 6.5%, the NGX Industrial Goods Index increasing by 6.1%, the NGX Oil & Gas Index appreciating by 4.0%, and the NGX Insurance Index improving by 2.3%.
President Tinubu's inauguration speech, described as market-friendly, addressed crucial issues including security, the economy, infrastructure, and monetary outlook.
Investors' concerns regarding multiple taxations, returns repatriation, and the convergence of foreign exchange rates were directly addressed. The president also emphasized putting an end to petrol subsidy.
Market analysts agreed that the stock market's performance was a direct response to President Tinubu's address, with a consensus that his policy direction would significantly boost the Nigerian economy and attract both foreign and domestic investments.
The rally in equities coincided with a rise in Nigeria's sovereign dollar-denominated bonds following the announcements of subsidy removal and the harmonization of exchange rates on the investors and exporters window (NAFEX) and the parallel markets. The forex market also responded positively, with the naira appreciating by 10 basis points at the parallel market. A spot market survey revealed that the naira rebounded to N770 per dollar at the parallel market, compared to N780 per dollar the previous day. However, the official Investors and Exporters (I&E) window saw the naira remain flat at N464.50 per dollar.
Market experts expressed their positive outlook for the Tinubu administration's economic policies. They believed that the market's response reflected confidence in the initiatives mentioned in the president's speech, such as the convergence of exchange rates, removal of fuel subsidy, lower interest rates, and ease of capital repatriation.
The consensus was that these measures would attract investments, strengthen the country's exchange rate, and contribute to sustained economic growth. However, experts emphasized the need for swift implementation of these policies and concrete actions to achieve the intended outcomes.
Overall, the Nigerian stock market witnessed a significant surge as a result of President Tinubu's policy direction, inspiring optimism among investors and fostering confidence in the Nigerian economy's future prospects.
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