There are indications that, global investors will be comfortable with a continuity government of President-Elect, Bola Tinubu when markets resumed this week. Five of Nigeria’s dollar bonds ranked among the 10 best performers on Monday in a Bloomberg index of 71 emerging and frontier nations,
“Nigerian bonds are posting some of the best gains in emerging markets as investors bet that the ruling-party candidate, Bola Tinubu, who is taking an early lead in the nation’s presidential election tally, will offer reforms to pull Africa’s largest economy out of a fiscal mess, a foreign newspaper”, Bloomberg Africa reported.
“Local news outlets were yet to report on the positive impact of Tinubu’s early lead on the foreign exchange market as of Monday night”, according to Economic Confidential.
“The country’s sovereign risk premium narrowed the most this year on Monday, according to JPMorgan Chase & Co. data. The equity benchmark in Lagos rose to an eight-month high,” Bloomberg said.
Counting is ongoing after the February 25 presidential election, though early trends show Tinubu winning three key states.
It however noted that money managers expect the nation’s next leader to take the unpopular decisions required to boost government revenue, stabilize the currency and cut down debt.
“Markets seem to be increasingly pricing in a Tinubu win, given the expectations that he could push through reforms quicker than others,” said Simon Quijano-Evans, the chief economist at Gemcorp Capital Management in London. “But it is difficult to see this holding if the election winner is unable to quickly turn around the macro story with visible reforms and personnel changes.”
Some of the gains may also be driven by bargain hunters after Nigeria’s bonds tumbled in the run-up to the elections, he said.
Nigeria’s bond due 2047 rose 1.8 cents on the dollar to 68.8, cutting its yield by 33 basis points to 11.5 per cent. Securities maturing in 2029, 2030, 2032 and 2033 all rallied more than two per cent in price. The NGX 50 Index rose for a fourth day to the highest level since June 2022, with Stanbic IBTC Holdings Plc accounting for more than half of the gains.