The value of listed equities investors traded in Nigeria reached a high of N2.42 trillion in eight months to August 31, 2023. This is higher than N1.89 trillion recorded in the same eight-month period of 2022, according to equities trading data at the Nigerian Exchange Limited (NGX).
The broadly positive sentiment that had lingered in the Nigerian equities market since the start of May persisted through August.
Though, investors saw the value of their investments decline by N91 billion in the just-ended month of September as the market dropped by 0.25 percent following sessions of profit-taking after the August rally.
The pro-market posture of President Bola Ahmed Tinubu’s administration increased stock investors’ confidence and optimism in the equities market. During this period, Nigeria’s equities market capitalisation garnered about N8.5 trillion.
The stock market, which saw sections of profit-taking and bargain hunting, had reached a 15-year high in August. The market had recently defied optimism expressed by Olayemi Cardoso, governor, the Central Bank of Nigeria (CBN).
This came as investors who still anticipate the next phase of the driver for the market remain cautious over the nation’s macroeconomic outlook, especially happenings at the foreign exchange (FX) market which directly affects foreign investments in stocks.
After the Independence Day holiday, the FX market opened on Tuesday, October 3 with the dollar trading at N1,000 at the parallel segment of the market as against N1,008/$ it exchanged last Friday.
The apex bank governor had on confirmation by the Senate expressed optimism over the economy and measures to stabilise the volatile FX market. He promised to pull back from aggressive development finance, ensure a culture of transparency, compliance and collaboration and to embark on zero tolerance for breach of the CBN Act.
He also set his immediate priority to include aggressive offset of huge FX obligations as part of measures to attack the current naira downturn which has become a huge burden for the economy.
A further look at the recent data on domestic and foreign portfolio participation in Nigeria’s equity trading in the eight-month period to August 31, 2023, shows stock trading by foreigners was valued at N222.78 billion or 9.22 per cent of the total value trade while local investors were responsible for stock trading worth N2.193 trillion or 90.78 per cent.
The domestic and foreign portfolio investment report is prepared on a monthly basis by NGX Regulation Limited, with trading figures from market operators on their domestic and foreign portfolio investment (FPI) flows.
In January 2023, stocks trading worth N195.10 billion were recorded. In February it grew to N188.91 billion, but decreased to N146.22 billion in March. It rose again to N191.21 billion in April, N322.92 billion in May, and N406.75 billion in June. The value of equities trading which reached N702.98 billion in July decreased remarkably to N262.56 billion in August.
The report shows that foreign investors had in eight months to August 2022 traded stocks worth N301.37 or 15.97 per cent of the review period’s total while their local counterparts were responsible for N1.585 trillion or 84.03 per cent. Foreign inflow was N95.26 billion while foreign outflow was N127.52 billion.
Domestic retail investors traded equities worth N737.57 billion while domestic institutional investors traded N1.456 trillion worth of equities in the same eight-month period to August 2023. In the same eight-month period to August 2022, foreign inflow was N149.97 billion, while foreign outflow was N151.40 billion.
Domestic retail investors had in eight months to August 2022 traded equities worth N522.60 billion while their institutional counterparts had accounted for stocks trading worth N1.063 trillion in the same period of 2022.
On a month-on-month (MoM) basis, total transactions at the nation’s bourse decreased by 62.65 per cent from N702.98 billion (about $991.91million) in July 2023 to N262.56 billion (about $338.13 million) in August 6 2023. The performance of the review month of August when compared to the performance in August 2022 (N123.97 billion) revealed that total transactions increased by 111.79 per cent.
In August 2023, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by about 72 per cent. The total transactions executed between August and prior month (July 2023) showed that total domestic transactions decreased by 65.97percent from N662.44 billion in July to N225.40 billion in August 2023.
Also, total foreign transactions decreased marginally by 8.34percent from N40.54 billion (about $52.58million) to N37.16 billion (about $47.94million) between July 2023 and August 2023.
A comparison of domestic transactions in August and prior month (July 2023) showed that retail transactions decreased by 57.76 per cent from N229.95 billion in July to N97.13 billion in August 2023. Similarly, the institutional composition of the domestic market decreased by 70.34 per cent from N432.49 billion in July 2023 to N128.27 billion in August 2023.
