Stocks up 0.56% as market regains investor confidence

By Aduragbemi Omiyale

Transactions worth 1.506 trillion naira were attracted to the Nigerian Exchange (NGX) Limited from local and offshore investors between January and May 2022, compared to 933.65 billion naira recorded during the same period of last year, according to data from the exchange. .

In a report published by NGX Regulation Limited on behalf of NGX, the May 2022 Domestic and Foreign Portfolio Investment (REIT) Report captured these transactions along with market operator trading numbers.

Additionally, domestic investors continued to hold firm on the NGX floor despite rising inflation and currency volatility in the foreign exchange market, which remained the main drivers of domestic and foreign portfolio investment.

Further analysis showed that foreign transactions amounted to 201.29 trillion naira, or about 13.37% of the total transactions made from January to May, while domestic transactions constituted 1.304 trillion naira, or 86 .63% of total transactions, exceeding foreign investment during the same period.

Analysis of domestic transactions showed that institutional investors outperformed retail investors. A comparison of domestic deals over the reporting period revealed that retail deals attracted N408.03 billion of investment, while investment from institutional investors amounted to N896.21 billion from January to May 2022.

For May, total transactions on the national stock exchange increased by 195.05%, from 205.88 billion naira (about $494.26 million) in April 2022 to 607.45 billion naira (about 1. 45 billion) in May 2022. The current month performance compared to the performance in May 2021 (97.19 billion naira) revealed that total transactions increased by 525.01%. In May 2022, the total value of trades executed by domestic investors exceeded trades executed by foreign investors by approximately 86%.

Subsequently, the total transactions executed between the current month and the previous month revealed that total domestic transactions increased by 214.40% from 178.80 billion naira in April to 562.15 billion naira. naira in May 2022. In contrast, total foreign transactions increased by 67.28% from 27.08 billion naira (about $65.01 million) to 45.30 billion naira (about $108.02 million) between April 2022 and May 2022.

However, the report revealed that “Over 15 years, domestic transactions decreased by 58.80% from 3.556 trillion naira in 2007 to 1.465 trillion naira in 2021, while foreign transactions also decreased by 29. 38% from N616 billion to N435 billion over the period. same period. »

As a result, the stock market regained more confidence early in the year, with key drivers like NGX-listed BUA Foods; investor reaction to annual corporate income and dividend declarations; the dominance 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 said local investors were taking advantage of NGX’s incredibly low stock prices to increase their investments.

They explained that local investors were increasing their participation in the equity market due to the attractive dividend yield in the market and due to the low yield environment in the fixed income market.

They observed that the development is good for the local stock market, saying it would restore the credibility and stability of the market, which was hitherto marred by the volatility occasioned by the activities of foreign investors.

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