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Disquiet at NASS, growing fears ahead 2019 election chasing away foreign portfolios

Apart from ongoing massive pullout of investible funds by foreign portfolio investors at the Nigerian Stock Exchange (NSE), the remaining foreign funds and even local players are waiting for possible dousing of tension in coming weeks.

Otherwise, political volatility has continued to drive sell offs on the equity sector of the market as virtually all the major blue chips depreciated in price, causing the market capitalization to slip further by N102 billion in four consecutive trading sessions.

Though analysts link the scenario to recent invasion of the National Assembly by operatives of the Directorate of State Services (DSS) who took over the complex, brandishing guns and wearing masks to deny federal lawmakers, journalists and staffers of the National Assembly from having access to the building, the surprise evolution of vote-buying has started sending anti-investment signals to the remaining players in the market.

Apart from the Month-to- Date and Year-to-Date losses moderated to -2.12 and -5.26 per cent, second-quarter earnings have been negative as most banks posting declines in loan growth, which reechoed economic squeeze.

Already, several fast moving consumer good firms are currently recording serial drop in profit, a signal that political alignments’ and realignments are now overshadowing deep pocket economic activities.

Accordingly, pundits at Cordros Capital Limited are cautioning, saying “In the absence of a positive one-off catalyst, as well as brewing political concerns, we guide investors to trade cautiously in the short to medium term. However, stable macroeconomic fundamentals remain supportive of recovery in the long-term.”

In his views, the Chief Executive Officer of Cowry Asset Management, Johnson Chukwu, noted that the current situation has affected the price of stocks, added that the economy might be bereft of foreign investments until after the elections.

He stressed that foreign investors will not be bullish in investing in the current unstable environment; rather they will remain on the sidelines to watch the development in the political space.

Chukwu noted further that “It is unhealthy, but it happens in many other countries whereby prior to general elections, there will be a slowdown in foreign investment in-flow into that country so Nigeria is not left out as the political uncertainties coupled with the National Assembly invasion will exacerbate the concerns of foreign portfolio investors”.

“There is definitely no way a country will have an election and there would not be a slowdown in economic activities, which as a result will affect the stock market prices, as well as affect demand and supply and so any form of uncertainty affect the market slope,” Chukwu averred.