The Nigerian stock market surged to its highest level since July 2008 on Tuesday, the first trading day since the suspension of Godwin Emefiele as the governor of the Central Bank of Nigeria (CBN) by newly-elected President Bola Tinubu.
Some market analysts have speculated that the surge is linked with investors’ optimism that the ouster of the CBN governor is a signal of coming monetary policy reforms.
According to Bloomberg, the main index of the Nigerian Exchange Limited (NGX) rose 2.7 percent to above 57,437 points, taking the year-to-date gains of the market to 11.8 percent, almost double the six percent return on the MSCI index.
Reacting to the development, Tajudeen Ibrahim, head of research at Chapel Hill Denham, said the rally is a reflection of optimism over the policy signals from the president.
“An improvement in the economy will enhance the performance of companies operating in the market,” Ibrahim told Bloomberg.
Meanwhile, the NGX Banking Index soared 8.5 percent to 570.64, the biggest advance in more than eight years.
“The exchange rate convergence is expected to lead to improvement in liquidity in the foreign currency market and will increase trading activities for the banks,” Ibrahim said.
Last Friday, Tinubu suspended Emefiele and directed that he transfers his responsibilities to the deputy governor, operations directorate.
Folashodun Adebisi Shonubi, the deputy governor, is expected to act as the CBN governor pending the conclusion of an investigation ordered by the president into Emefiele’s activities.
The Department of State Services (DSS) later announced that Emefiele is currently in its custody for “some investigative reasons”.
