Nigerian Markets Rally After Buhari’s Victory In Presidential Poll

Nigeria’s main shares index soared to its single biggest daily gain this year on Wednesday while bond yields fell sharply and the naira currency surged in the black market as investors cheered Muhammadu Buhari’s presidential election victory.

The main shares index rose 8.4 percent as financial markets in Africa’s biggest economy welcomed the peaceful outcome of the closely-fought elections, marking the first time in Africa’s most populous nation where a sitting president was voted out of power through the ballot box.

Buhari takes charge of Africa’s biggest oil producer and one of the continent’s most turbulent democracies, three decades after seizing power in a military coup.

The naira firmed 0.46 percent to 217 against the dollar on the parallel market, a black market dealer said.

The currency traded at 197 naira to the dollar on the interbank market, a level it has traded at since February, after the central bank pegged the rate in a de facto devaluation.

“The peaceful conclusion of the election has allayed the fears of foreign investors about the market,” Ayodeji Ebo, head of research at Afrinvest said, referring to the bourse.

He said most listed firms, especially banks, were trading at a discount to their true values, attracting investors.

Analysts said foreign investors backed Buhari’s victory and were taking position by snapping up shares across the board.

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Foreign investors fled Nigerian markets starting late last year, unnerved by political uncertainty before the vote as well as the sharp fall in the global price of oil which negatively impacted the currency, triggering a devaluation in November.

“Investors were waiting on the sidelines to see election concluded in a peaceful manner. So everyone is taking positions now while those that are in are not willing to sell,” he said.

The index crossed the psychological 34,000 points level to stand at 34,400 points, extending gains to a ninth consecutive session – its longest winning streak this year – after outgoing president Goodluck Jonathan peacefully relinquished power.

Nigerian dollar-denominated bonds issued by the government and banks rose for a second straight day, with sovereign issues hitting their highest levels since mid-December.

Yields on sovereign naira bonds fell sharply with the 5-year bond down 101 basis points after Buhari’s landslide victory.

Author: News Editor

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