The Nigerian equities market closed negatively last week following investors’ reaction to the postponement of general elections and profit taking. The market had maintained a positive performance since the beginning of February as investors were hopeful that the political risk would be reduce after the elections on February 16.  The market rallied 6.6 per cent within two weeks, rising 3.7 per cent the previous week.

However, the postponement of the elections last week affected demand for shares as investors remained on the sidelines while others locked in profits.

Consequently, the  Nigerian Stock  Exchange (NSE) All-Share Index (ASI)  fell by 0.61 per cent to 32,515.52, while market capitalisation closed lower at N12.126 trillion. Similarly, all other indices finished lower with the exception of the NSE ASem, NSE Banking, NSE Insurance NSE-AFR Bank Value and NSE Oil/Gas indices which rose by 0.96 per cent, 0.68 per cent, 0.02 per cent  0.95 per cent and 0.13 per cent  respectively.

According to Afrinvest (West Africa), at the start of the week, investors reacted negatively to the postponed presidential election before recalculating the political risk and subsequently re-positioning in bellwethers on Tuesday.

“We had anticipated the market to maintain a positive position till Friday based on improved sentiments on Tuesday, but this was short-lived as we observed more cautious trading in terms of volumes and higher sell-offs before the close of the week. We believe most investors stayed on the sidelines during the week as the uncertainty regarding the elections heightened by mid-week,” Afrinvest said.

Market operators had said the postponement was not good for the stock market. For instance, Chairman of Association of Stockbroking Houses of Nigeria (ASHON), Partick Ezeagu said the postponement led to more uncertainty in the stock market in particular and economy in general.

According to him, uncertainty is the greatest phobia that afflicts any market and even more applicable to the capital that is very sensitive to uncertainty in the political fate of a sovereignty.

“The delay in the conduct of our national election and the fact that it happened less than six hours before the election was to commence, investors will react negatively unless a very credible reason is adduced and effectively disseminated urgently,” Ezeagu had said.

Similarly, the Group Chief Executive Officer of Emerging Africa Capital Group, Mrs. Toyin Sanni, had said the postponement lengthened the waiting time for investors who had already adopted wait and see approach to prospects of investing in Nigeria.

“In investments, the longer the waiting time for any outcome, the higher the perception of risk. Also, the postponement indicates that we may not as a country have all our act all together thus increasing concerns about the possibility of the election process being smooth and hitch free,” she had said.

Sanni had added that the development could also raise, in some quarters, fears that the process itself may be being manipulated.

“Anything that reduces the perception of transparency affects our attractiveness and credibility and investment destination,” she said.

Another stockbroker, Mr. David Adonri of Highcap Securities Limited, had also said the postponement of the election at the dying minute was an insult to the electorate.

“Every sector of the economy including the capital market will be disastrously affected. It will further erode investor confidence, which is already at a low ebb,” Adonri said.

Also,  Mr. Sola Oni of Sofunix Investment,  said the   postponement is  a sad commentary that will   deepen  Nigeria’s political risk with dire consequences on investment decision.

“The shock caused by the announcement may jolt foreign portfolio investors who have been apprehensive of the presidential election . It is not unlikely that trading on the stock market  may be moderated by this development as it is capable of further eroding investor confidence in our market. Every political decision has direct or indirect impact on the financial market. I think the time has come for our leaders to stop making Nigeria a laughing stock before the international community,” he said.

However, Garba Kurfi of APT Securities and Funds Limited said the postponement may not have much negative impact on the market given the growth the market has recorded in the last two weeks.

“Although it has a cost to the economy but may not affect our market  due to expectations of companies’ results which have started coming into the market. We are expecting the market to continue to rise in anticipation of  good results to be declared by companies,” he said.

But despite the announcement of corporate earnings with dividends last week, most investors remained on the sidelines, leading to a decline in the market.