Foreign Transactions in Nigeria Market Declines by 33%
Foreign investors still waiting by the side amidst the US dollar shortage in the Nigerian economy. Participation in the stock market declined by about 33%, according to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX).
The report showed that total transactions in the local bourse settled at N3.56 trillion in 2023, signalling a 53.9% year-on-year increase from the N2.32 trillion in 2022, Cordros Capital Limited said in the latest review.
On a month-on-month basis, total transactions rose to a six-month high, expanding by 14.4% month on month to N343.90 billion in December from N300.67 billion, according to the investment firm review.
Analysts highlighted that the improvement was mainly due to a 29.1% month-on-month increase in domestic transactions which printed t N296.03 billion, representing 86.1% of total transaction value. Selloffs Provoke Spike in Nigerian Treasury Bills Yield
The registered increase in domestic transactions was primarily driven by institutional investors amid a marginal contraction from retail investors (-1.2% m/m). In the period, institutional investors deepened their footprint with a 49.7% uptick in transactions conducted in the market. On the other hand, retail investors’ trade slumped 1.2% in the month.
Meanwhile, foreign inflows remained weak in December 2023. Foreign transactions declined by 32.9% to N47.9 billion from N71.40 billion in November due to the effect of the lingering FX liquidity constraints. “We expect domestic investors to continue to dominate the domestic equities market over the short-to-medium term, even as higher fixed-income yields may constrain buying activities”.
Cordros Capital analysts believe foreign investors will continue to adopt a wait-and-see approach in the near term, the firm however envisages improved foreign participation over the medium term driven by expected FX inflows as guided by the authorities, CBN’s recent actions in clearing its FX backlogs, and firm direction of interest rates. #Foreign Transactions in Nigeria Market Declines by 33%
