For the first five months of 2022, the total value of domestic and foreign transactions on Nigerian Exchange Limited reached N1.51 trillion. This figure is larger than the N933.65 billion in total transactions carried out by local and foreign investors from January to May 2021.
The ‘Domestic and Foreign Portfolio Investment May 2022′ report, produced on behalf of NGX by NGX Regulation Limited, presented market operators’ transactions and trading numbers. It also showed that domestic investors had continued to hold ground on the floor of the NGX despite rising inflation and currency volatility in the foreign exchange market, which remained key drivers of the domestic and foreign portfolio investment.
Further analysis showed that foreign transactions stood at N201.29bn, accounting for about 13.37 percent of the total transactions carried out from January to May, while domestic transactions constituted N1.3tn, representing 86.63 percent of the total transaction, outperforming the foreign investment during the same period.
Analysis of domestic transactions showed that institutional investors outperformed retail investors.
A comparison of domestic transactions in the period under review revealed that retail transactions pulled N408.03bn in investment, while institutional investors’ investment amounted to N896.21bn from January to May 2022.
For May, total transactions at the nation’s bourse increased by 195.05 percent from N205.88bn (about $494.26m) in April 2022 to N607.45bn (about $1.45bn) in May 2022.
The current month’s performance, when compared to the performance in May 2021 (N97.19bn), revealed that total transactions increased by 525.01 percent. In May 2022, the total value of transactions executed by domestic investors outperformed foreign investors by 86 percent.
Subsequently, the transactions executed between the current and prior month revealed that total domestic transactions increased by 214.40 percent from N178.8bn in April to N562.15bn in May 2022.
In contrast, total foreign transactions increased by 67.28 percent from N27.08bn (about $65.01m) to N45.3bn (about $108.02m) between April 2022 and May 2022.
The report revealed that “Over 15 years, domestic transactions decreased by 58.80 percent from N3.556tn in 2007 to N1.47tn in 2021, while foreign transactions also decreased by 29.38 percent from N616bn to N435bn over the same period.
“Consequently, the stock market regained more confidence at the start of the year, with key drivers like BUA Foods, listing on NGX; investors’ reaction to companies’ full-year earnings and dividend declarations; predominance of domestic players over foreign players in the market, and low yields in the fixed income market which forced investors to consider more profitable securities in the equity market.”
Capital market analysts stated that local investors were taking advantage of the incredibly low prices of stocks in NGX to increase their investments.
They explained that local investors were increasing their stake in the equities market due to the market’s attractive dividend yields and the low yield environment in the fixed income market.
They observed that the development was good for the local bourse, adding that it would restore credibility and stability to the market, which was hitherto marred by volatility occasioned by the activities of foreign investors.
