Domestic, Foreign Transactions In Stocks Declines To N101.18bn In July

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The total value of domestic and foreign transactions on Nigerian Exchange (NGX) Limited in the month of July, 2022 amounted to N101.18 billion, as foreign investors growing apathy dangles.

The Domestic and Foreign Portfolio Investment (FPI) in July 2022 report released by NGX Regulation Limited captured these transactions as well as trading figures from market operators.

Meanwhile, domestic investors have continued to dominate the market despite rising inflation and volatility in the foreign exchange market which remained key drivers of the FPIs.

The report showed that the total inflow in equities market transactions by both domestic and foreign investors further declined by 35.36 per cent to N101.18 billion in July 2022 from N156.52 billion in June 2022.

Domestic, Foreign Transactions In Stocks Declines To N101.18bn In July

Capital market analysts said that investors’ participation in the Nigerian equities market is gradually waning despite Nigerian stocks being among the cheapest and relatively attractive stocks in the world.

According to Cowry Asset Management Limited, “but a catch of hope lies in the continued outperformance by domestic both retail and institutional investors over their international counterparts in equities trading by a 42 per cent difference.

“Away from the notion that foreign investors have always exhibited apartheid during this time in a pre-election season when they opt to aggressively exit Nigerian equities with the institutional investors threading the same path, the declining sentiment in the market has paved the way for some reconsiderations and portfolio rebalancing efforts by these investors.”

On a monthly basis, in July 2022, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 42 per cent as domestic investors pulled a total transaction of N71.67 billion, while foreign investors transaction for the month hit N29.68 billion.

A further analysis of the total transactions revealed that total domestic transactions decreased significantly by 37.46 per cent from N114.33 billion in June to N71.50 billion in July 2022. Similarly, total foreign transactions decreased by 29.65 per cent from N42.19 billion to N29.68billion between June 2022 and July 2022.

Also, the institutional investors outperformed retail investors as retail transactions decreased by 30.51 per cent from N44.11 billion in June to N30.65 billion in July 2022. Similarly, the institutional composition of the domestic market decreased by 41.83 per cent from N70.22 billion in June 2022 to N40.85 billion in July 2022.

Cowry Asset Management Limited stated that “in our opinion just like in the June edition where we averred that local institutional investors may have more incentive to remain in the market despite the rates hike by the Central Bank of Nigeria (CBN) and other central bank chiefs across the globe in July and regardless of the expectations that listed corporates will continue to deliver strong profit growth, we reckon that sustained upward pressure on interest rates will continue to create apathy towards risk assets like equities for investors, especially the risk aversed investors.”