•As domestic participation soars to 367%
By Chinwendu Obienyi
The total transactions on the floor of the Nigerian Exchange Limited (NGX) has now risen to N720 billion in the first four months of 2023.
This was even as domestic participation has increased to about 367 per cent in the review period.
This is according to data obtained from the Domestic and Foreign Portfolio Investment Report of NGX.
The 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.
The economy during the review period witnessed prolonged FX scarcity, inflation, Naira scarcity and the rising cost of goods and services. These challenges took its toll on the capital market which is the barometer of the economy.
Daily Sun analysis revealed that as at 31 January 2023, total transactions at the nation’s bourse increased by 39 per cent from N140.70 billion recorded in December 2022 to N195.10 billion.
However, transactions on the NGX decreased to N188.91 billion in February owing to the uncertainty to the build-up to the 2023 elections. It further dipped to N146.22 billion in March and picked up in April, increasing by 31 per cent to N191.21 billion.
This meant that total transactions at NGX surged to N721.44 billion in four months. Although, the figure is somewhat low when compared with N798.08 billion recorded in the first four months of 2022.
On the other hand, domestic participation has continued to dominate foreign participation in recent times. It is therefore no surprise that local participation increased to 367 per cent after recording 90 per cent, 87 per cent, 94 per cent and 96 per cent respectively.
Further analysis of the report revealed that the total domestic transactions performed by investors on the floor of the Nigerian Exchange Limited (NGX) rose to N659.26 billion while total foreign transactions stood at N62.18 billion in the same period under review.
Interestingly, 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. It is expected that traction on the NGX will pick up after President Bola Tinubu’s recent inaugural speech especially pointing to removal of the fuel subsidy which has been a popular discourse in the country for decades.
Tinubu also stated that his administration will be targeting a higher GDP growth, create jobs, work towards a unified exchange rate and ensure that investors and foreign businesses repatriate their hard earned dividends and profits home.
Reacting to the President’s comment, the Group Chief Executive Officer, Nigerian Exchange Group (NGX Group), Oscar Onyema, expressed optimism that the nation’s economy will witness more investment flows.
Speaking during a panel session at the 7th edition of the International Court of Arbitration (ICC) Africa Conference on International Arbitration which held in Lagos recently, Onyema said, “All these are the right noises for money. Money goes to the least resistant places where it can get the best risk adjustment returns without unnecessary hassles because there is competition across the globe.
“On what we have seen in the last eight years, there has been an outflow of foreign portfolio investments predominantly and more than half of our markets are outside of America, but with these policy changes, you can begin to understand why we are very optimistic that these flows will come back to the economy”.