Capital market reacts negatively to Trump’s victory

By Chioma Obinagwam

The Nigerian capital market evidently reacted negatively to the Donald Trump’s election as the president of the United States of America(USA) as   key measurement indicators of the equities’ side of the Nigerian capital market closed in red.

Basically, data mined from the weekly report of the Nigerian Stock Exchange(NSE) for the week ended November 11, 2016, indicate that the indicators- the NSE All-Share Index and Market Capitalization depreciated by 3 per cent to close the week at 26,170.88
and N9.009 trillion respectively.

The Exchange Traded Products(ETPs) followed the same pattern, where a total of 5,080 units of ETPs valued at
N62,550.75 executed in 17 deals, compared with a total of 56,688 units valued at N817,310.72
transacted last week in 31 deals, indicating a decline in the volume and value of transactions.

As usual, the debt investment segment of the capital market, sustained momentum as investors transacted a total of 73,694 units of Federal Government Bonds valued at N80.177 million were traded in 9 deals compared to a total of 13,020 units of Federal Government Bonds valued at N12.953 million transacted last week in 14 deals.

Reacting to the downward trend, Chief Relationship Officer(CRO) at Foresight Securities and Investment Limited, Charles Fakrogha stated that investors reacted negatively to the victory, which led to a decline in the market.

“We saw the reaction all over the world. Investors reacted negatively, however they had to face reality,” he said.

“We saw that the market went down on Wednesday shortly after his victory but there was a rebound on Thursday. We expected the market to sustain the momentum on Friday but it did not,” he added.

Fakrogha, who is also a financial analysts said that despite reacting to the victory of Trump, investors are reacting probably to the macro-economic indicators, which are still in red.

He also noted that most investors are actually selling their stocks.

Fakrogha said: “Most people are actually selling. Obviously, when you have that kind of market, prices are bound to fall,” he explained.

Speaking on what to expect in the upcoming week, he said that it looks bleak as the market may continue in the downward direction.

The analysts, however noted that it is an opportunity for investors to invest in the capital market and advised investors to look for bagging stocks- stocks whose prices are below their intrinsic value and buy them.

On his part, the President of Renaissance Shareholders’ Association of Nigeria, Olufemi Timothy disclosed that despite claims by critics that Trump is anti-black, he is optimistic that his leadership as the president of America would be in the best interest of Africa, particularly Nigeria.

“For me I’m a very optimistic person. I see him as a visionary leader. Although people see him as anti-black or a racist, it’ll be a good regime for Nigeria and Africa. The world is enlightened and I don’t see him affording to be a racist for now,” Timothy affirmed.