Nigerian banking stocks slumped the most since June 2016 a day after the re-election of President Muhammadu Buhari, as some investors showed disappointment at the defeat of his market-friendly opponent.
An index of Nigeria’s 10 largest banking stocks dropped 4.6 percent by the close in Lagos Thursday, while the country’s benchmark stocks index retreated for a third day.
The Lagos market’s biggest laggers by index points were Guaranty Trust Bank Plc, which dropped 6.9 percent, Zenith Bank Plc, which fell 4 percent and Nigerian Breweries Plc, down 4.5 percent.
“We are seeing investors react negatively in the short term” to the election results, Olabisi Ayodeji, an analyst at Exotix Capital, said from Lagos.
Buhari easily won a second term as president of Africa’s biggest oil producer with promises to revive an anemic economy and tackle security threats including a devastating insurgency by Islamic State. His main opponent, Atiku Abubakar, who was seen as favored by investors, has rejected the results of the weekend vote.
Bloomberg had already analysed that Buhari’s election victory probably means continued political interference in Nigeria’s economy and slower growth
Meanwhile, Buhari will have little time to celebrate his resounding victory in Nigeria’s presidential election before facing the multitude of problems dogging Africa’s biggest oil producer.
“The legal challenge to last weekend’s vote promised by his main rival, Atiku Abubakar, is the least of his worries. Add to that a listless economy, Islamist State attacks wreaking havoc in the northeast and an explosive cocktail of worsening poverty and rapid population growth,” Bloomberg stated in a recent article.
The 76-year-old former general came to power in 2015 on a wave of optimism after becoming Nigeria’s first opposition leader to win at the ballot box, with promises of fighting endemic corruption and ending the economy’s addiction to oil. So far, progress has been slow.
“President Buhari can expect an even briefer honeymoon than he did in 2015,” said Matthew Page, a former U.S. State Department specialist on Nigeria, who’s based in Cambridge, U.K. “Unless Buhari experiences an epiphany and adopts a more dynamic, reform-minded, and business-friendly strategy, we can expect Nigeria’s socioeconomic situation to stagnate during his second term.”
In his first four years, Buhari was a strong proponent of a statist economy. He called on the central bank not to let the naira weaken and made clear he disagreed with the pledges of multimillionaire Abubakar to privatize inefficient and loss-making oil refineries and the Nigerian National Petroleum Corp., which dominates the local energy industry.
His administration’s drive to clean up business practices brought him into conflict with some foreign companies. South Africa’s MTN Group Ltd. is fighting claims that it owes $2 billion of backdated taxes, which have dragged its shares down. And the government is suing firms including JP Morgan Chase & Co. and Royal Dutch Shell Plc in Europe for what it says was a corrupt oil deal in 2011. All companies deny the allegations.