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Stocks May Close Higher Despite Election Fever

By on March 30, 2011

Despite the  bear run at the stock market  and anxiety  among the investors created by uncertainties over  the general elections, the nation’s stock market  will close positively going by  its performance during past election years.

The market had recovered from a two-year decline and appreciated by 18.9 per cent last year. The positive trend was maintained in the first month of the 2011, raising hope for another growth at the end of the year.
But the market has been sliding since February due to profit taking, a development that was worsened by uncertainties of the general elections coming up next month.

In spite of the lull,   THISDAY checks revealed that the stock market has recorded positive performances during in election years.
There have been three elections years between 1999 and 2007 and out of the three elections years,  it was only one year(1999) that the market recorded a margin decline of 7.9 per cent. The   market witnessed positive  growths in the remaining two years(2003 and 2007).

For instance, in 2003, the market recorded a growth of 66 per cent and a higher growth of 75 per cent in 2007.
Market analysts are bullish that the nation’s stock market will overcome  the 2011 elections fever and end the year with a growth. Analysts at Meristem Securities Limited have estimated a growth of 30 per cent for the market this year.

Before now, some stockbrokers had expressed optimism about the future of the market, saying it would bounce back after the elections.
For instance, the  Managing Director/CEO of Investment Centre Limited, Mr. Ifeanyi Odunwa had said that he was  not disturbed by sliding prices at the stock market, saying the worst was over.

“Sincerely, I am not disturbed because as far as  I know, the worst is over for the stock market. I also have  a very high hope of quick recovery of the market but  this should definitely be after the completion of  the general elections which must be fair and  credible to guarantee good investment environment,” he said.

According to him, good conduct of the elections would thereafter usher in renewed  investors’ confidence, which  will bring along with it massive  investment activities by both foreign and local investors into the market.

“The present lull and price  slide is caused by investors who want to cash out before the elections as well as those who adopting wait and see attitude observing  the political climate before and after the elections before they can commit their funds to the market,” Odunwa stated.

Analysts at Skyview Capital Limited   have said that they expect the market to close the second quarter on a bullish note.  They based their positive outlook on more positive corporate earnings for December 31, and March 31, 2011, conclusion of recapitalisation of rescued banks, conclusion of Asset Management Corporation of Nigeria (AMCON’s) take-up of non-performing loans by banks among other factors.

Source : Thisday