Domestic investors lead market by 80% in February
Insecurity in the country and other macroeconomic challenges have continued to depress foreign investors’ appetite for stocks as the latest report by the Nigerian Exchange Limited (NGX) shows that the total value of transactions executed by domestic investors outperformed those of foreigners by 80 per cent.
Specifically, the Domestic and Foreign Portfolio Investment report released by the NGX for February showed that total domestic transactions hit N339.49 billion while total foreign transactions stood at N44.52 billion.
Also, the performance of the market over the last 16 years showed that domestic transactions, decreased by 45.30 per cent from N3.556 trillion achieved in 2007 to N1.945 trillion in 2022 while foreign transactions also decreased by 38.47 per cent, from N616 billion to N379 billion.
Total domestic transactions also accounted for about 84 per cent of the total transactions carried out in 2022, whilst foreign transactions accounted for about 16 per cent of the total transactions in the same period.
As at 28 February 2023, total transactions at the nation’s bourse decreased by 3.17 per cent from N195.1 billion (about $422.94million) executed in January 2023 to N188.91 billion (about $409.72 million) in February 2023.
The performance of the current month (February 2023) when compared to the performance in February 2022 (N183.56 billion) revealed that total transactions increased by 2.91 per cent.
In February 2023, the total value of transactions executed by Domestic Investors also outperformed transactions executed by Foreign Investors by circa 80 per cent.
According to the report, the total transactions executed between the February and prior month (January 2023) revealed that total domestic transactions decreased by 0.53 per cent from N170.2 billion in January to N169.29 billion in February 2023.
However, total foreign transactions decreased more significantly by 21.2 per cent from N24.90 billion (about $ 53.98 million) to N19.62 billion (about $ 42.51 million) between January 2023 and February 2023.
Furthermore, the report also showed that institutional investors outperformed retail investors by 58 per cent.
A comparison of domestic transactions in the current (February) and prior month (January 2023) revealed that retail transactions decreased by 2.44 per cent from N35.66 billion in January to N34.
President of the Independence Shareholders Association of Nigeria, Moses Igbrude, noted that fears around investments had become visible in the equities space, going by the NGX foreign portfolio report, which shows the inflows and outflows of foreign investments as well as the percentage of both foreign investment and domestic investment for each month.
He said activities in January and February 2023` have shown a significant increase in foreign investment outflows while domestic investments have dominated activities in the market.
According to him, if the investment climate did not change with the government’s monetary and fiscal policies as well as improvement in economic conditions, investments inflow into the country might eventually dry up.
Vice President of Highcap Securities Limited, David Adonri, said the primary market for equities, which is tied to the fundamentals of the economy, has been comatose since 2015, while capital formation is paltry, due to weak macroeconomic fundamentals of the economy.
He urged the incoming administration to tackle prevailing macroeconomic issues impeding investment in the country to attract more foreigners and issuers and grow the market.