Equity Market To Remain Resilient Through Election – Expert

The stock market will be resilient this year, according to investment analyst Oluwaseun Dosunmu, despite the general history of market declines during election years.

At the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) on Wednesday in Lagos, Dosunmu, the Head of Investment Research at Parthian Securities, made the forecast.

He contends that local investors control the stock market to a large extent and that capital flight is not common in the equities market.

He spoke on the theme: “Assesing Nigeria’s Financial Sector and Outlook for the Economy in 2023.”

“In 2019 our market was largely driven by domestic players because the foreign investors decided to leave, which means that domestic institutional players like the Pension Fund Administrators (PFAs) and the likes.

“The interesting thing is that if the domestic players are moving the market, that means the market will not be subject to foreign shocks.

“It is a good thing and it also has its negative side, but one benefit is that whenever anything happens in the global economy the impact on our market is always minimal,” said Dosunmu.

According to him, historically, the stock market is negative every election year.

“From the start of 2019, we had only three months in the whole year that closed positive.

"But that is not the case in this election year,” he said.

He emphasised that the story had changed and that investors should concentrate on particular industries and equities that would provide them with the desired rate of return in 2023.

For her part, Ronke Akinyemi, Head of Global Markets at Parthian Partners, said that while the government would benefit from eliminating the subsidy, the process should be carried out gradually.

She did, however, point out that while the elimination of the fuel subsidy would improve Nigeria's foreign reserves and relieve the budgetary burden, it would also result in higher living expenses.

“If subsidy is removed, there is likely going to be increased social unrest.

“We haven’t even seen anything and we have already seen unrest in little bits and pieces.

"But on the flip side, if subsidy is removed, we expect our reserves will improve,” she said.

She said that even if the subsidy were to be eliminated, it should be done so gradually rather than all at once.

“So, let’s say 25 per cent, wait a few months see how that pans out, take out more so that the effect is not fully felt by the most vulnerable even though it will be fully felt because it is staggered.

“Doing so will sort of prepare them for what is ahead.”