Nigeria is resurgent—for now.
Optimism about the future of Africa's biggest economy hid a nadir in mid-February, when many Nigerian stocks were down double digits for 2015, and 10-year government bond yields spiked to more than 16 percent. Investors fretted over a potentially turbulent presidential election combined with low oil prices cutting into national income, a plummeting naira currency, and serious violence from Boko Haram religious extremists.
The calculus changed Tuesday when Nigeria—the world's seventh largest country by population and Africa's new economic powerhouse—succeeded in its first democratic transfer of power from one party to another.
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Muhammadu Buhari, a former general, defeated incumbent president Goodluck Jonathan in largely peaceful voting. The successful election sent markets soaring: The Global X MSCI Nigeria ETF—which reflects locally traded shares like Nigerian Breweries, Guaranty Trust Bank, Nestle Nigeria and Dangote Cement—gained nearly 14 percent. Yields on 10-year bonds fell from nearly 15 percent to 13.8 percent April 1, according to FactSet data.
"The market has spoken," said Ashley Bendell, head of U.S. distribution for African Alliance, an investment bank with offices in 12 countries on the continent. "This was a momentous event for the country, and we can expect to see near term fund flows."