AMID the President Bola Tinubu administration’s removal of fuel subsidy and its economic implications, the Nigerian stock market rallied well last week as investors gained N1.55 trillion.
Some market watchers believed the impressive rally was not unconnected with the new administration’s economic position, as read by President Tinubu in his inaugural speech.
Tinubu, besides declaring in his speech on May 29 that his administration was removing the subsidy, also promised to improve the economy by tackling inflation and unifying the exchange rates.
He also said his administration would ensure that foreign investors are able to repatriate their funds.
The message seemed to have resonated well with the investing public, analysts. They said the President’s economic highlights promised transparency in the investment market.
The market gained a whopping N1.55 trillion on the first day, Tuesday, May 30, after the President’s inauguration, based on solid optimism as contained in his speech, an investment and portfolio analyst, Abel Ezekiel, explained.
“A major policy statement which I considered to be the major icing on the cake is allowing easy and unhindered repatriation of dividends and profits by portfolio and direct investors.
“This has been one of the major challenges hampering inflow of foreign investors into the economy,” Ezekiel said.
The portfolio analyst attributed the solid positive performance of the equities market, in the review week, to the President’s remark to tame inflation.
Inflation had gone high to 22.22 per cent in April, forcing the apex bank to hike the monetary policy rate (MPR), once again, to 18.5 per cent.
He argued that the MPR had driven most investors away from the equities market into the fixed-income market, which he considered less risky.
Ezekiel also attributed investors’ positive sentiment seen in last week’s trading to Tinubu’s “assuring” disposition to business, unlike his predecessor’s.
“He is going to bring business-friendly policies. A bullish rally greeted the smooth handover to President Tinubu,” a stockbroker, David Adonri, corroborated.
Adonri, an executive vice chairman of Highcap Securities Limited, also viewed Tinubu’s policy as resonating well with investors.
“The massive increase in investors’ confidence translated into the big rally. The equities market remained upbeat throughout the week despite the negative effect of removing fuel subsidy,” he said.
How the market traded
The market opened for four trading days, May 30 to June 2, as the Federal government had declared Monday, May 29, a public holiday for the inauguration.
The All-Share Index (ASI) rose by 5.37 per cent to 55,820.50 basis points, and the market capitalisation increased by the same percentage to N30.395 trillion.
Investors traded a total turnover of 2.586 billion shares worth N46.643 billion in 35,122 deals on the floor of the Nigeria Exchange Limited, compared to a total of 1.963 billion shares valued at N33.899 billion in 30,827 deals that exchanged hands in the previous week.
The financial services industry, measured by volume, led the activity chart with 1.890 billion shares valued at N23.041 billion traded in 17,806 deals, and contributed 73.10 per cent and 49.40 per cent to the total equity turnover volume and value, respectively.
The conglomerates industry followed with 170.218 million shares worth N638.188 million in 1,830 deals, while the consumer goods industry had a turnover of 132.432 million shares worth N3.837 billion in 4,938 deals.
Access Holdings, United Bank for Africa Plc and FBN Holding were the top three stocks that traded the most when measured by volume.
The stocks accounted for 915.908 million shares worth N10.916 billion in 6,575 deals, contributing 35.42 per cent and 23.40 per cent to the total equity turnover volume and value, respectively.