Foreign Investors’ Shares Jump To 14.15%, Reduces Domestic Control In Stock Market

From a 5.77 per cent share of the market in July, foreign investors’ participation in the stock market jumped to 14.15 per cent in August, causing a reduction in domestic investors’ control of stock market transactions on the Nigerian Exchange Limited (NGX).

The reported 14.15 per cent by foreign investors is the highest participation in stocks traded this year, having notched up 8.38 per cent, and reducing domestic investors’ participation to 85.85 per cent in the month under review. Domestic investors controlled 94.23 per cent of the transactions on the exchange in July.

Foreign investors have continued to reap from the Central Bank of Nigeria (CBN) foreign exchange unification.

Both foreign and domestic investors traded N262.56 billion in stocks in August. Of the figure, domestic investors staked N225.40 billion while foreign investors traded N37.16 billion in stocks on the bourse.

The latest “domestic & foreign portfolio participation in equity trading” for the month of August disclosed that, “As of 31 August 2023, total transactions at the nation’s bourse decreased by 62.65 per cent from N702.98billion (about $991.91million) in July 2023 to N262.56billion (about $338.13million) on August 6 2023.

“The performance of the current month when compared to the performance in August 2022 (N123.97billion) revealed that total transactions increased by 111.79 per cent.

“In August 2023, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 72per cent.”

“A further analysis of the total transactions executed between the current and prior month (July 2023) revealed that total domestic transactions decreased by 65.97 per cent from N662.44billion in July to N225.40billion in August 2023.

“Similarly, total foreign transactions decreased marginally by 8.34 per cent from N40.54billion (about $52.58million) to N37.16billion (about $47.94million) between July 2023 and August 2023,” the report added.

It will be recalled that during a 16-year period, domestic transactions decreased by 45.30 per cent from N3.556 trillion in 2007 to N1.945 trillion in 2022 whilst foreign transactions also decreased by 38.47 per cent from N616 billion to N379 billion over the same period.

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. Also, total domestic transactions during the eight months of 2023, stood at N2.194 trillion while total foreign transactions stood at N222.78 billion.

Reacting to the development, market analysts described the performance as mixed- positive signs of domestic inflow growth and optimism driven by reforms but also a significant decline in overall market transactions in August 2023 compared to the previous month.