In a surprising turn of events, the Nigerian stock market failed to follow the upward trend witnessed in global financial markets following Donald Trump’s victory in the United States presidential election.
While key global financial markets surged, particularly assets tied to “Trump trades,” Nigeria’s benchmark index, the NGX All Share Index (ASI), closed in the red on Wednesday.
The market decline saw the ASI shed 57 basis points, falling from 97,123.61 points on Tuesday to close at 96,567.24 points.
This reversal wiped out the previous days’ gains, with the year-to-date (YTD) return on the index dipping to 29.15%. Market capitalization also took a hit, dropping by N337.13 billion to settle at N58.51 trillion.
The retreat was largely attributed to a sell-off in Tier-1 banking stocks, which included notable declines from GTCO (-1.91%), Zenith Bank (-0.81%), and United Bank for Africa (UBA) (-9.99%).
These losses outweighed the positive performances of other stocks such as First Bank Nigeria Holding (FBNH) (+1.65%), ACCESS Corporation (+2.12%), and WAPCO (+0.66%).
While the global markets were in an upswing, reacting to Trump’s electoral success, the Nigerian market did not immediately reflect similar optimism.
Bitcoin, for example, saw a surge of over 8.1%, hitting a fresh all-time high, and the US dollar-dominated foreign exchange markets posted their biggest 1-day gain since February 2023.
In contrast, Nigerian investors appeared more cautious, with the financial markets here showing signs of a delayed response to the outcome of the U.S. election.
Experts provided varying perspectives on the Nigerian market’s reaction. Olatunde Amolegbe, former president of the Securities and Exchange Commission (SEC), suggested that the lag in the Nigerian market’s response was expected.
“There is typically a lag time. But I understand Wall Street was extremely bullish,” he commented, referring to the positive response in global markets.
Tajudeen Olayinka, an investment banker and stockbroker, also weighed in, noting that the Nigerian market was yet to fully react to Trump’s victory.
“Strong reactions were noticed when U.S. markets opened earlier in the day, but the Nigerian market has not fully mirrored this. We may see further shifts in the coming days, particularly across Nigeria’s fixed income, equity, and foreign exchange markets, as the victory could significantly impact geopolitics and the global economy,” Olayinka remarked.
While the Nigerian market might have shown a momentary setback, investors remain watchful of upcoming shifts in the global financial landscape.
Analysts suggest that any substantial reactions in the local markets may materialize as the global implications of Trump’s win unfold, impacting economic policy, international trade, and financial flows in the coming weeks.
For now, Nigerian investors will continue to monitor developments both at home and abroad, seeking clarity on how global trends, particularly the new political administration in the U.S., will affect their portfolios.
