It’s Christmas before its time on the Lagos Stock Exchange in Nigeria. On Tuesday, October 6, the index jumped over the thirty largest stocks by 5.7%, the second-best result in the last fifteen years. In the last month, the Nigerian stock market has been in good shape and has gained more than 13% as the country is going through a severe recession.
Never before has the connection between the real economy and finance been so striking in Nigeria. As the country struggles with a recession synonymous with job losses and deep poverty, the small financial world is celebrating. Since September 22, the stock market has started with turbo, and daily transactions have not fallen below 4 billion. The Naira brand.
The euphoria started with a stream of dividends paid in mid-September by the country’s largest banks. The Covid-19 pandemic did not affect their results, and the top five paid 37 billion naira to their shareholders. At the same time, all this money is stuck in Lagos due to currency restrictions imposed by the authorities who are now fighting for a depreciation of the currency. It was therefore necessary to invest this money.
Normally, financial institutions flock to state taxes, but they are currently less attractive due to very high inflation. Investors and banks therefore had billions to invest and they had only one profitable investment left, equities, hence the stock market boom. It remains for the wisest to meditate on this economic proverb: “In the stock market you go upstairs and you always go down with the elevator!”