The Nigerian stock market witnessed a significant surge on Tuesday, reaching its highest level since July 2008, following the suspension of Central Bank Governor Godwin Emefiele. Investors, anticipating a potential currency devaluation, propelled the main index of the Nigerian Exchange to soar above 57,437 points, outperforming MSCI’s main emerging equity benchmark, which remained stagnant.
A Bloomberg report highlighted that the year-to-date gains of Nigerian stocks currently stand at 11.8 percent, nearly doubling the six percent return on the MSCI index. This rally, coupled with the increased gains in Nigerian dollar bonds observed on Monday, reflected market optimism regarding the policy signals emanating from the newly elected President, Bola Tinubu.
Tajudeen Ibrahim, the head of research at Chapel Hill Denham, emphasized that an improvement in the country’s economy would positively impact the performance of companies operating in the market. President Tinubu’s actions, including the removal of fuel subsidies and the suspension of Governor Emefiele, have contributed to the bullish sentiment.
Following the suspension, the NGX Banking Index experienced a remarkable 8.5 percent surge, reaching 570.64 points, marking its most significant advance in over eight years. Ibrahim noted that the anticipated convergence of exchange rates would enhance liquidity in the foreign currency market and boost trading activities for banks.
Amidst these developments, pressure is mounting on the naira to depreciate further towards its market value. Traders have already witnessed the currency falling to 474 naira per dollar, leading to speculations of additional depreciation in the near future.
