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By Chinwendu Obienyi
The total value of domestic and foreign transactions on Nigerian Exchange (NGX) Limited stood at N2.324 trillion in the year 2022.
According to data gotten from the domestic and foreign portfolio investment (FPI) report for December 2022 which was released by the NGX at the weekend, total transactions by both domestic and foreign investors increased by 22.38 per cent to N2.324 trillion as against N1.899 trillion achieved in the previous year of 2021.
The total domestic transactions 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. The transaction data for 2022 shows that total domestic transactions stood at N1.945 trillion, whilst total foreign transactions stood at N379.23 billion.
As at December 31, 2022, total transactions at the nation’s bourse increased by 34.80 per cent from N104.38 billion (about $234.88 million) in November 2022 to N140.70 billion (about $305.15 million) in December 2022.
The performance of the current month when compared to the performance in December 2021 (N158.26 billion) revealed that total transactions decreased by 11.10 per cent. In December 2022, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 78 per cent.
A further analysis of the total transactions executed between the current and prior month (November 2022) revealed that total domestic transactions increased significantly by 39.51 per cent from N89.95 billion in November to N125.49 billion in December 2022.
However, total foreign transactions increased by 5.41 per cent from N14.43 billion (about $32.47million) to N15.21 billion (about $32.99 million) between November 2022 and December 2022.
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. For example, the domestic inflow and outflow for the month under review stood at N62.03 billion and N63.46 billion while foreign inflow and outflow in December 2022 stood at N8.64 billion and N6.57 billion respectively.
Further analysis of the report showed that institutional investors outperformed retail investors by 44 per cent. A comparison of domestic transactions in the current and prior month (November 2022) revealed that retail transactions increased by 32.53 per cent from N26.62 billion in November to N35.28 billion in December 2022.
Similarly, the institutional composition of the domestic market increased by 42.44 per cent from N63.33 billion in November 2022 to N90.21 billion in December 2022.
Over a 16-year period, 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.
Reacting to the report, analysts at Cordros Research, said that the low performance of foreign investors was due to the lingering FX liquidity constraints, heightened global uncertainties, and high global interest rates.
“In the short to medium term, we expect domestic investors to continue to dominate the market, although election uncertainties and prospects for higher FI yields may constrain buying activities.
Also, FPIs who have exhibited a lacklustre interest in domestic equities are likely to remain on the sidelines due to upcoming elections, sustained FX liquidity challenges.
