It is no longer news that The Independent National Electoral Commission, INEC, has postponed to February 23rd, the General election earlier scheduled for Saturday, February 16th, 2019. This does not entirely come as a surprise as there had been speculations about the possible suspension of the elections due to issues relating to the distribution and collection of Permanent Voters Cards (PVC) and the readiness of INEC.
It would have surprised many onlookers at the general calm around the Nigerian capital market, weeks and even days to the February 16th general elections. While the general volume of trade declined across markets, due to the large sense of uncertainty in the air; the general disposition wasn’t Negative towards the economy from investors. For instance, February 15th, the day which was meant to be the eve of the now postponed elections, saw the Nigerian Stock Exchange trading session end on a positive note. The All Share Index closed at 32,715.20 basis points, up 0.81%, while the year to date, the index was up 4.09%.
The analysis and predictions across investments houses across the world have been less alarmist than those running up to the 2015 general elections. As a matter of fact, the discussions have been around how much of a rally the markets would experience depending on who won the presidential elections.
This could be instructive as investors seem to have a bit more confidence in the Nigerian democratic process, which showed after the 2015 elections. In 2014/15, over a 3 month period before the election, the Nigerian Stock Exchange (NSE) lost 8.40% of its worth, only to regain 8.4% in a single day after the election. In apparent reaction to the successful conclusion of the Presidential election with the announcement of Buhari as winner by INEC, market capitalisation jumped by N903.435 billion or 8.42%. Capitalisation closed at a new high of N11.62 trillion, while the All-Share index similarly rose by 2,635 basis points or 8.30%, the most among 93 global indices tracked by Bloomberg.
The postponement however presents a new challenge, if the 2015 scenario is to replay itself, as the market hit 7 straight days of losses right after the postponement, taking the index to a two year low and into territories that had not been seen since January 2013. Arguably, the NSE-ASI had already been hit by pre-election jitters but the sell-offs after the postponement in 2015 was substantial.
In 2019, the election shift is unlikely to help market sentiments as the least to be expected, is a hold off on significant market activity. It will raise a few concerns that might create a lull in the equities, money and forex markets. With the real reality of moving from concern to panic and even self-preservation mood which could then lead to a flight-safety stance by investors.
The performance on the Nigerian Market in recent times has no doubt shown us that the nexus between politics and the economy of a nation is so strong and interwoven to the extent that political decisions taken usually do have far reaching consequences on the economy, and no time more than an election period.
The small respite in all of this, is that the postponement was just for a week and the presidential and National Assembly elections will now hold on February 23, 2019. Investors and stakeholders can hold their breaths, hoping that there will be no further changes; because another could lead to serious implications for the economy.
The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.