By Chinwendu Obienyi
Nigeria’s stock market experienced a robust increase in trading activity in the month of January 2024, owing to gradual increase in retail and institutional transactions which drove domestic transactions up by 91.8 per cent.
This is according to the Domestic and Foreign Portfolio Investment Report for the month under review.
The Domestic and Foreign Portfolio Investment Report is prepared on a monthly basis by NGX Regulation Limited, with trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows. These transactions are carried out by Domestic and Foreign investors.
According to the report, the total transactions executed between the current and prior month (December 2023) revealed that total domestic transactions 91.8 per cent of gross transactions) increased by 102.15 per cent from N296.03 billion in December 2023 to N598.41 billion in January 2024. This was supported by higher accretions from retail (+102.2 per cent month-on-month (m/m) and institutional (+53.0 per cent m/m) investors.
Similarly, foreign transactions (8.2 per cent of gross transactions) increased by 11.0 per cent m/m to N53.11 billion compared with N47.87 billion recorded in the previous month.
The report noted that total transactions at the nation’s bourse increased by 89.45 per cent from N343.90 billion (about $382.59 million) recorded in December 2023 to N651.52 billion (about $479.99 million) in January 2024.
The performance of the current month when compared to the performance in January 2023 (N195.10 billion) revealed that total transactions increased significantly by 233.94 per cent. Also, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 84 per cent.
At the end of the reporting month, domestic inflows and outflows stood at N310.17 billion and N288.24 billion while foreign inflows and outflows stood at N15.78 billion and N37.33 billion. The report further revealed that institutional Investors outperformed retail Investors by 4 per cent.
A comparison of domestic transactions in the current and prior month (December 2023) revealed that retail transactions increased by 211.73 per cent from N91.61 billion in December to N285.58 billion in January 2024. Similarly, the institutional composition of the domestic market increased by 53.03 per cent from N204.42 billion in December 2023 to N312.83 billion in January 2024.
Over a sixteen (16) year period, domestic transactions decreased by 10.94 per cent from N3.556 trillion in 2007 to N3.167 trillion in 2023 whilst foreign transactions also decreased by 33.28 per cent from N616 billion to N411 billion over the same period.
The report revealed that total domestic transactions accounted for about 89 per cent of the total transactions carried out in 2023, whilst foreign transactions accounted for about 11 per cent of the total transactions in the same period. The transaction data for 2024 shows that total domestic transactions are circa N598.41billion, whilst total foreign transactions are circa N53.11billion.
Reacting to the development, analysts at Cordros Research, said, “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. Elsewhere, we believe foreign investors will continue to adopt a cautious stance in the near term, closely monitoring the activities of the apex authorities in improving FX liquidity and ensuring sustainability”.