NGX Domestic Transactions Decrease By 45%

Capital Market Goes Green Ahead Of 2022 Corporate Earnings

Domestic trading volume on the Nigerian Exchange Limited has decreased from N3.556 trillion in 2007 to N1.945 trillion in 2022, a decline of 45.30 percent.This information was provided in a report published by the NGX that covered trading activity on the local market in April.

Domestic transactions increased over N1tn before declining to N634bn in 2016, according to data from NGX, from N3971tn in 2008 to N422bn in 2011. It lost another trillion naira in 2019 (N985bn), and by the end of 2022, it had fallen to N1945tn. The amount of international transactions on the NGX fell by 38.47% within the same time frame, from N616 billion to N379 billion.

Meanwhile, 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 highest amount of foreign transactions recorded within the 16 years under review was in 2014, where N1538tn was recorded, followed by N1219tn in 2018. Foreign transactions have steadily dropped on the NGX since 2018; from N943bn in 2019 to N729bn in 2020 to N435bn in 2021 and N379bn at the end of 2022.

The transaction data for 2023 showed that total domestic transactions were about N659.26bn, whilst total foreign transactions were about N62.18bn. A breakdown of the foreign transactions showed that N24.90bn was recorded in January 2023, reduced to N19.62bn in February, went lower to N9.19bn in March 2023 and dropped further to N8.47bn at the end of April 2023.

As of April 30, 2023, total transactions at the nation’s bourse increased by 30.77 per cent from N146.22bn (about $317.09m) on March 4 2023 to N191.21bn (about $413.25m) on April 5, 2023.

In April 2023, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by about 92 per cent. Further analysis of the total transactions executed between the current and prior month (March 2023) revealed that total domestic transactions increased by 33.35 per cent from N137.03bn in March to N182.74bn in April 2023.

In April, Institutional Investors outperformed Retail Investors by 18 per cent. A comparison of domestic transactions in the current and prior month (March 2023) revealed that retail transactions increased by 40.43 per cent from N52.83bn in March to N74.19bn and the institutional composition of the domestic market increased significantly by 28.92 per cent from N84.20bn in March 2023 to N108.55bn in April 2023.

Speaking on the floor of the NGX, its Chief Executive Officer, Temi Popoola, expressed concern about the inflow of funds into the capital market.

At a closing-gong ceremony held in honour of the CEO of StoneX Group for Europe, the Middle East and Africa, Philip Smith, in Lagos recently, Popoola said that despite a total of N360tn moved within the Nigerian economy in 2022, only one trillion naira made its way into the capital market.

Popoola said that the market could thrive with enabling policies from the government and expressed a desire to collaborate with the new administration to develop the right policies that will promote listings in the market.

He said, “The age-old question for the capital market has always been how to get more corporates to list on the Exchange. Federal Government policies have influenced listings in the market. For instance, in the ’70s, as a result of the indigenization policy introduced by the then administration, listings grew from 6 to 81.

“We are looking to collaborate with the new administration to develop the right policies that promote listings in our market with the support of stakeholders like the Chartered Institute of Stockbrokers, Association of Securities Dealing Houses of Nigeria (ASHON), Association of Issuing Houses of Nigeria and other.

According to the NGX CEO, the Exchange is keen on growing Nigeria’s retail participation and boosting investors’ confidence in our market.

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