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GEJ concession bouys financial market



The concluded 2015 presidential elections lived up to its tag as the most keenly contested election since the return to democratic rule in 1999, ending with the APC candidate Muhammadu Buhari emerging as the president-elect with 54% of the votes.

Despite initial apprehensions about political brinkmanship, early concession by now outgoing president Goodluck Jonathan and the largely peaceful conduct of the elections appears to have removed tail risks to investing in naira assets.

Indeed, the resurgence of optimism is captured in an election bounce across local financial markets akin to the ‘Modi’ effect in India in 2014.

On Wednesday, NSEASI logged the highest ever one day gain (+8.3%) which has wiped out previous YTD weakness, while yields on naira bonds shed ~100bps intra-day to sub-14% levels even as Eurobond fell below 6% for the first time since December 2014.

Considering the prime role of political risk in shaping our capital market outlook coming into 2015, the relief from a near-anticlimactic process is palpable and justified.

However, the key issue is how things evolve from here.



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