Stock Market Dips 0.26% As Onnoghen Saga Continues


Monday, January 28, 2019 9.00PM / Teslim Shitta-Bey with Saheed Kiaribe, Proshare Research

Investors in the local stock market have begun to respond to news about the suspension of the Chief Justice of Nigeria, Justice Walter Nkanu Onnoghen, the unfolding events suggest a mild equity sell off as both local and foreign money managers keep an eye on developments, particularly sensitive to the outcome of the meeting of the Nigerian Judicial council (NJC), scheduled for tomorrow Tuesday, 29 January, 2019.  According to Olusegun Atere, Head of trading strategy at Apel Assets & Finance, “today’s trading dip after last week’s bullish run does appear to mirror the markets growing caution over developments in the judicial space. Foreign investors are getting a little jittery about Nigeria while local investors are adopting a ‘siddon look’ (wait-and-see) orientation towards the market. A lot hinges on what plays out over the next few days’’, he observes. The implication is a lull in demand for stocks and a slow sell off by those with a weak stomach for high-stakes political power play.

Cause for fear

The markets fear centres on last week’s developments where the following events took place:

  • The President, Mr. Muhammadu Buhari, suspended the Chief Justice of Federation and President of the Supreme Court of Nigeria, Justice Walter Onnoghen, on allegations of not fully declaring his assets as at the time of his appointment as the Chief Justice
  • Appointment of an acting Chief Justice, Justice Tanko Muhammed. 
  • The Nigeria Bar Association (NBA) officially protested the suspension of the Chief Justice on the grounds that the procedure did not comply with the requirements of the Nigerian Constitution. The constitution requires that a Chief Justice of the Supreme court cannot be removed before an enquiry of appears in the NJC who would investigate the matter and come to a resolution upon which a recommendation would be made for the removal of the Chief Justice.
  • Foreign diplomatic missions including the United States (USA), United Kingdom (UK) and European Union (EU) and their home governments have cautioned Nigeria about the dire implications of breaching the laws upon which the judiciary draws its powers and independence, namely; the Nigerian Constitution.

Responding to the noise 

Responding to these events the international and local investment communities have begun to readjust country risk ratings as they discount equity values and put pressure on local bond prices.

Table 1 Bond yield movement in the last week 21-25 January 2019

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Source: World Bond Market

The country’s 90 day bond lost -191.2bps over the week as the twists and turns of the Onnoghen saga continued. This was over half of the loss of -311.6 bps in the last one month. The maximum yield on the 90 day fixed interest instrument was +14.461% at the beginning of last week before toppling over to +12.549% by weekend, its lowest yield calculation for the week.  


Chart 1 Nigeria Bond market yield April 2018-January 2019

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The equity market has also taken a punch to the jaw at the beginning of the week as traders had a rethink of their last week bullishness. The stock market dropped -0.26%or 26bps on investor apprehension of market conditions based on uncertainty surrounding the FGN’s suspension of the Chief Justice of the Federation.


Chart 2 Nigerian Stock Exchange All Share Index 21-28 January 2019

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Source: NSE, Proshare Research


A society split

The Onnoghen suspension has split Nigerians into two distinct camps; those that believe that the Chief Justice suspension was justified by his breach of the code office he swore to uphold and those that believe that the process of suspension amounted to executive overreach and was a violation of the Federal constitution which requires that the NJC sits and investigates allegations against senior judicial officers before they vcan be arraigned for misconduct. Indeed the removal of the Chief Justice of the federation requires a two-third endorsement by members of the Nigerian Senate. Some analysts have noted that the current constitutional crisis reflects a number of fundamental facts and anomalies:

  • The NJC is a body set up by the 1999 Constitution of the Federal Republic of Nigeria under section 153. The body’s existence was the contrivance of former Military Head of State General Sani Abacha to exert control over the judiciary. By appointing the Chief Justice, Abacha hoped to gain control of the judiciary as a military (and then perhaps civilian) President. This circumvented the normal practice where a country has a body of benchers that is made up of senior judicial peers responsible for the disciplining of senior and junior judicial officers. Nevertheless, without prejudice, the Constitution is clear about the procedures for removing a Chief Justice.
  • It is inconceivable that two Chief Justices head the Nigerian Judiciary conterminously. According to some lawyers, the position of Acting Chief Justice is alien to the Constitution and any known law of the country while the position of Chief Justice subsists. The Civil Society has also come out in an apparent defense of the Constitution and has requested that the Federal Government lift Onnoghen’s suspension until the NJC advises on the matter.


With the FGN’s decision to suspend the Chief Justice apparently politicized, the options for the cooling of frayed nerves is becoming increasingly distant. The government seems to have increasingly alienated itself from a critical support-base that brought it to power which could have ominous implications for the administration and the country as a whole as investors begin to reassess safety of investment and stability of the polity.

Waiting Game

As the week passes the Onnoghen suspension issue will continue to dominate both the political space and the already restless equity and money markets. A lot will hinge on tomorrow’s decision of the NJC and the FGNs response. Until then financial market stakeholders have decided on a waiting game.

Proshare Nigeria Pvt. Ltd.

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