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By Chukwuma Umeorah
Domestic investors have maintained their stronghold n the Nigerian stock market, despite a significant contraction in total transactions during August 2023. While foreign investors made a notable impact, contributing 14.15 per cent of the overall N262.56 billion traded, domestic players remained the driving force, accounting for 85.85 per cent of transactions during the month.
The market, which witnessed a remarkable year-on-year growth of 111.79 per cent compared to August 2022, experienced a sharp decline of 62.65 per cent in total transactions, dropping from N702.98 billion in July 2023 to N262.56 billion in August 2023, as reported by the Nigerian Exchange Limited (NGX).
Domestic investors, who have traditionally dominated the market, continued to play a significant role by contributing 72 per cent to the total transactions. However, it is worth noting that there was a concerning drop of 65.97 percent in the value of domestic transactions, falling from N662.44 billion in July 2023 to N225.40 billion in August 2023.
This trend has raised concerns among market analysts and investors alike, signaling potential challenges for the domestic investment landscape.
On the foreign investment front, there was a relatively modest decline of 8.34 per cent, with transactions decreasing from N40.54 billion in July 2023 to N37.16 billion in August 2023. This marginal dip suggests that foreign investors may be maintaining relative stability and confidence in the Nigerian market, even in the face of an overall market contraction.
In terms of investor segments, both retail and institutional investors witnessed significant declines in their contributions to market transactions. Retail transactions dropped by 57.76 per cent from N229.95 billion in July to N97.13 billion in August 2023, while institutional investments also saw a decline of about 70.34 per cent, down from N432.49 billion in July of the previous year to N128.27 billion in August 2023.
The overall data suggest that the massive influx of cash into equities, which had gained momentum following President Tinubu’s inauguration, may have tapered off in August.
With total transactions at N262.5 billion, this represents a significant reduction from the transactions recorded in July and June. Notably, transactions between January and April consistently remained below the N200 billion mark.
