Nigeria’s assets fell sharply on Monday after President Donald Trump of the United States threatened to invade the country to root out terrorists accused of killing Christians. The nation’s stocks declined by 0.25 percent, losing N247 billion at the close of trading, as investors digested the implications of Trump’s threat.
Before the start of trading this week, analysts had warned that the statement could raise the risk premium on Nigerian assets and erode recent reform-driven gains.
The NGX All-Share Index and market capitalisation fell from Friday’s highs of 154,126.46 points and N97.829 trillion to 153,739.11 points and N97.582 trillion, respectively.
The decline, recorded on the first trading day in November, dragged year-to-date (YtD) returns to 49.37 percent. Trump, on Friday, designated Nigeria as a “country of particular concern,” following it up a day later with a threat to cut off US aid and invade the country to “wipe out Islamic terrorists” accused of genocide against Christians.
The US president made the comments on his official Truth Social handle, adding that he had ordered the Pentagon to “prepare for possible action.”
Before the remarks, Futureview analysts had forecast a rebound in equities this week, citing renewed interest in undervalued stocks and strong third-quarter earnings.
Coronation Research analysts had also projected a “mild bullish tone” driven by bargain hunting, while CardinalStone Research said it was monitoring post-earnings market reactions to ensure strategic positioning.
Nigeria’s Eurobond market mirrored the local selloff, with all 12 dollar bonds suffering losses.
The FGN Eurobond 2047 saw the steepest fall, dropping by 0.6 cents on the dollar to 88.26 cents. According to Bloomberg data, Nigerian dollar bonds accounted for all 10 of the worst-performing emerging-market securities as of 10:45 a.m. in Lagos. The development reversed last week’s gains, when average Eurobond yields declined by 14 basis points week-on-week to 7.49 percent.
The naira depreciated by one percent against the dollar in the official foreign exchange (FX) market as sentiment soured following Trump’s threat.
Data from the Central Bank of Nigeria (CBN) showed that the naira fell by N14.61 to close at N1,436.34 per dollar, compared to N1,421.73 on Friday. At the parallel market, however, the currency strengthened by 1.04 percent to N1,440 per dollar, from N1,455 previously. Nigeria’s external reserves rose to $43.19 billion as of October 31, according to CBN data.
A report by Coronation Merchant Bank indicated that FX inflows through the Nigerian Foreign Exchange Market (NFEM) slowed to $1.04 billion from $1.37 billion.
Foreign portfolio investors accounted for 62.3 percent ($645.4 million) of inflows, followed by exporters (15 percent), corporates (11.6 percent), foreign direct investments (1.9 percent), and other sources (9.2 percent).
