Foreign investors investment on the Nigerian Exchange Limited declined by N24.67 billion in the month of July.
Total foreign transactions decreased by N24.67 or 30.02 per cent from N82.19 billion in June 2024 to N57.52 billion under the period review.
This was contained in the recently released NGX’s Domestic and Foreign Portfolio Investment report for July 2024, which tracks monthly trading activity.
The report showed total transactions at the nation’s bourse increased significantly by 38.66 per cent from N354.55 billion in June 2024 to N491.61 billion in July 2024. The performance of the current month when compared to the performance in July 2023 revealed that total transactions decreased by 30.07 per cent.
In July 2024, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 76 per cent.
A further analysis of the total transactions executed between the period under review and prior month revealed that total domestic transactions increased by 59.38 per cent from N272.36 billion in June 2024 to N434.09 billion in July 2024.
Reviewing domestic transactions showed that retail investors outperformed institutional investors by 26 per cent. A comparison of domestic transactions revealed that retail transactions increased significantly by 138.48 per cent from N114.02 billion in June 2024 to N271.92 billion in July 2024.
Also, the institutional composition of the domestic market increased by 2.42 per cent from N158.34 billion in June 2024 to N162.17 billion in July 2024.
Analysts noted that the decline in foreign investors’ investment can be attributed to economic uncertainty and currency volatility in the foreign exchange market as they were major drivers of the Domestic & Foreign Portfolio Investment.
They observed that the high local investors participation in the market is good for the local bourse, saying that this has restored credibility and stability to the market, which was hitherto marred by volatility occasioned by the activities of foreign investors.
The chief operating officer of InvestData Consulting Limited, Ambrose Omordion said that “foreign investors’ participation in the Nigerian equities market is gradually waning despite Nigerian stocks being among the cheapest and relatively attractive stocks in the world. But a catch of hope lies in the continued outperformance by domestic investors over their international counterparts in equities trading by a 76 per cent difference in July 2024 when compared to prior month.”
The vice president, Highcap Securities Limited, Mr. David Adnori stated that investors are trading based on sentiment.
Adnori, however, was optimistic that the stock may maintain its positive momentum in H2, 2024, on the backdrop of Banking sector recapitalisation and expected H1, 2024 corporate earnings by most especially the banks listed on the Exchange.
While analysts noted that “as Nigeria navigates the complex economic challenges, the role of domestic investors will be crucial in sustaining market activity. However, sustaining improvement in FPI could help support a near term easing in price and exchange rate pressures.”
