The half-year 2023 edition of the Nigerian Exchange (NGX) report on domestic and foreign portfolio participation in equities trading showed that the total equities market transactions increased Year-to-Date as of June 30, 2023 by 25.96 per cent from N322.92 billion (about $693.99 million) recorded in May 2023 to N406.75 billion (about $537.87 million) in June 2023 with local investors’ patronage surpassing those by foreign investors.
Precisely, the domestic investors pulled transactions of N1.306 trillion, representing 90 per cent in the first six months of the year, while foreign investors transacted total equities worth N145.08 billion, representing 10 per cent.
In one year, total domestic transactions accounted for about 84 per cent of the total transactions carried out in 2022, whilst foreign transactions were about 16 per cent of the total transactions in the same period.
Also, the performance of the current month when compared to the performance in June 2022 (N156.52 billion) revealed that total transactions hit 159.87 per cent in June 2023, even as the total value of transactions executed by domestic investors outperformed transactions executed by foreign Investors by circa 78 per cent.
Further analysis of the total transactions executed between the current and prior month (May 2023) revealed that total domestic transactions increased by 26.34 per cent from N285.76 billion in May to N361.01 billion in June 2023.
Similarly, total foreign transactions increased by 23.09 per cent in one month, from N37.16 billion (about $79.88 million) to N45.74 billion (about $60.49 million) between May 2023 and June 2023.
Further breakdown of the total transactions executed between the current and prior month (May 2023) revealed that total domestic transactions increased by 26.34 per cent from N285.76 billion in May to N361.01 billion in June 2023.
Similarly, total foreign transactions increased significantly by 23.09 per cent from N37.16 billion (about $79.88 million) to N45.74 billion (about $60.49 million) between May 2023 and June 2023.
A comparison of domestic transactions in the current (June 30) and prior month (May 2023) revealed that retail transactions increased by 40.7 per cent from N88.5 billion in May to N124.52 billion in June 2023.
Similarly, the institutional composition of the domestic market increased marginally by 19.89 per cent from N197.26billion in May 2023 to N236.49 billion in June 2023.
Over 16 years, domestic transactions decreased by 45.30 per cent from N3.556 trillion in 2007 to N1.945 trillion in 2022 whilst foreign transactions also decreased by 38.47 per cent from N616 billion to N379 billion over the same period.
Experts who spoke on the development argued that FPIs lacklustre interest in domestic equities are likely to remain on the sidelines due to sustained forex liquidity challenges, uncertainties, insecurity and interest rate hikes in the country.
A stockbroker, Tunde Oyediran said efforts at attracting the needed foreign direct investment (FDI) to grow the economy may not yield the expected results unless the government and relevant agencies enhance the ease of doing business in Nigeria.
He pointed out that because Nigeria is competing with the neighboring countries for investments, there is a need for government at all levels to create a healthy business environment to facilitate industrial growth and promote investment inflows.
An independent investor, Amaechi Egbo, pointed out that private sector partnership is very key in attracting FDI but noted that an enabling environment must be created by fiscal and monetary authorities.
He added that many private enterprises have what it takes to pull huge capital from abroad but these investors want to see a stable business environment with high-growth opportunities in Nigeria.
