How would Elections impact the Equities Market?


With Nigeria’s general election four days away, the outcome of the election remains hazy as permutations remain too close to call. Clearly, investors are keenly awaiting the outcome of the polls as this defines the direction of policy going forward – much of which might have the potential to materially impact businesses and the economy at large.

How would Elections impact the Equities Market? - Brand Spur
Sources: NSE, United Capital Research

Contrary to the expectation of a heated run-up to the 2019 election, campaigns and rallies have been relatively peaceful. To buttress this position, the financial market has recorded a significant amount of foreign portfolio inflows. Accordingly, the Nigerian equities market has reported strong buying momentum over the last 8 trading days, rallying 6.2% over the period.

No matter who wins, we believe that the election could spark a further bullish run in the market for two main reasons. First, both parties are proposing to push friendly economic policies and initiatives forward. Whether the incumbent maintains power or the opposition supplants the APC at Aso Rock, the market stands to make significant gains on the news – especially if another ‘phone call’ were to happen before the result of the election is announced by INEC (as witnessed in 2015).

Secondly, the market dislikes uncertainty and we know that political uncertainty has been hogging the limelight for stocks. Once it clears, the market would likely respond accordingly.