NSE Falls By N65bn On Shock Trump Victory

By Ikenga Chronicles November 10, 2016

The Nigerian stock market fell for the sixth time, as investors were caught completely off guard following the surprise election of Donald Trump as American president.

Only 11 gainers were recorded against 27 losers. Consequently, the All- Share Index dipped 190.58 basis points or 0.72 per cent to close at 26.173.69 basis points as against 26,364.27 recorded the previous day, while market capitalisation of equities depreciated by N65 billion from N9.075 trillion the previous day to N9.010 trillion.

According to reports, the MSCI Emerging Markets Index slid 2.4 per cent, paring losses as much as 3.3 per cent after Trump gave his victory speech, seeking reconciliation and cooperation with his political opponents.

Benchmark gauges in Brazil, China and South Korea fell at least 2 per cent. Meanwhile, the local bourse recorded a turnover of 146.1 million shares exchanged in 3,039 deals in the day’s trading.

The banking sub sector of the financial services sector was the most active (measured by turnover volume) with 50.3 million shares exchanged by investors in 1.390 deals.

Volume in the sub-sector was largely driven by activities in the shares of UBA Plc and GTB Plc. Also, Premium sub sector, boosted by activities in the shares of FBNH Plc and Zenith Bank Plc followed with a turnover of 21.08 million shares in 429 deals.

Further analysis of the day’s trading showed that CAP Plc topped the day’s gainers’ table with 4.06 per cent to close at N35.40 per share, while Dangote Sugar Plc followed with 2.94 per cent to close at N6.30 per share.

UPL Plc added 2.63 per cent to close at N3.90 per share. On the flip side, PZ Cussons Plc led the losers’ with a drop of 8.39 per cent to close at N16.49 per share, while Flour Mills Plc shed five per cent to close at N18.05 per share.

Nascon Plc plunged by 4.90 per cent to close at N7.37 per share. In a related development, US stocks, however, rose with the dollar and treasuries slumped, as investors reassessed the effects of Donald Trump’s surprise victory in the American presidential election.

According to Bloomberg News, the S&P 500 Index rose, led by health-care shares and banks, as traders unwound bets that a win by Hillary Clinton would bring stronger regulatory scrutiny.

Treasuries yields topped 2 per cent on wagers that Trump will ramp up spending.

The greenback climbed the most since the day after the UK’s vote to leave the European Union, Mexico’s peso sank amid prospects the integration with the US will unravel, while Russian shares jumped on speculation Trump will mend ties with Moscow. Gold and the yen pared gains.

“It’s an amazingly impressive recovery off the lows for risk assets,” said Craig Collins, managing director of rates trading at Bank of Montreal in London.

“It’s very surprising given the feel the session had to start with, that it was a massive risk- off flight to quality bid.”

A Trump victory had been portrayed by analysts as having the potential to unhinge markets banking on a continuation of policies that coincided with the second-longest bull market in S&P 500 history.

Going into the vote, most polls showed Democrat Hillary Clinton ahead.

The Republican has pledged to clamp down on immigration to the U.S. and renegotiate free-trade agreements. However, in his victory speech, he pledged to focus on rebuilding U.S. infrastructure. US stocks rebounded as speculation Trump will pursue business- friendly policies offset some of the broader uncertainty surrounding his ascent.

The S&P 500 rose 1 per cent to 2,159.89 in New York, after falling as much as 0.7 per cent. Health-care shares surged, as investors unwound bets that a win by Clinton would bring intense regulatory scrutiny.

Meanwhile, Bank of America Corp. led lenders higher on speculation a Trump presidency could usher in reforms that ease regulatory burdens on financial- services firms.

“We expect the equity market response to the election result will be limited,” David Kostin, chief US equity strategist at Goldman Sachs Group Inc.

“The US economy has been expanding for seven years and continues to grow at a subdued pace. We expect the U.S. stock market will climb slowly during the next few years in line with earnings growth.”

Global stocks tend to advance on days when Americans vote for a new president, and continue their rally in the aftermath – if not in crisis times.

Since its inception in 1987, the MSCI All-Country World Index climbed at least 2.6 per cent in the three months following a presidential vote, except during the dot-com bubble burst in the early 2000s and the 2008-2009 financial crisis.

The Stoxx Europe 600 Index rose 1.5 per cent, rebounding from an earlier slide.

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