…outperform foreign investors by 57%
The total value of transactions executed by domestic investors in the last seven months of 2020 was N675.55 billion as against N431.22 billion, which was the total transactions carried out by foreign investors during the period under review.
Investigation by New Telegraph showed that the total value of domestic transactions outperformed transactions executed by foreign investors by N244.33 billion or 56.66 per cent. As at July 31, 2020, total transactions at the nation’s bourse decreased by 19.92 per cent from N128.88 billion (about $333.25 million) in June 2020 to N103.21 billion (about $265.55 million) in July 2020. The performance of the current month when compared to the performance in July 2019 (N113.47 billion) revealed that total transactions decreased by 9.04 per cent.
In July 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 32 per cent. A further analysis of the total transactions executed between the current and prior month (June 2020) revealed that total domestic transactions decreased by 5.40 per cent from N72.54 billion in June to N68.62 billion in July 2020. However, total foreign investirs’ transactions declined sharply by 38.60 per cent from N56.34 billion (about $90.89 million) to N34.59 billion (about $89.00 million) between June and July 2020 Further checks showed that Institutional Investors outperformed Retail Investors by 6 per cent.
A comparison of domestic investors’ transactions in the current and prior month (June 2020) revealed that retail transactions increased marginally by 0.62 per cent from N32.34 billion in June 2020 to N32.54 billion in July 2020. While the institutional composition of the domestic market decreased by 10.25 per cent from N40.20 billion in June 2020 to N36.08 billion in July 2020. Highlights of the performance of the market over time shows that over a 13-year period, domestic transactions decreased by 72.30 per cent from N3.556 trillion in 2007 to N985 billion in 2019 while foreign transactions increased by 53.08 per cent from N616 billion to N943 billion over the same period. Total domestic transactions accounted for about 51 per cent of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49 per cent of the total transactions in the same period.
The Chief Executive Officer, Nigerian Stock Exchange (NSE), Mr. Oscar Onyema, said recently that the sustained trading that was activated at the early lockdown contributed to increased domestic investors, stressing that timely market information drove liquidity. Onyema, who disclosed that the nation’s capital market is currently dominated by 60 per cent domestic investors as against 40 per cent foreign investors. Speaking last week at the webinar titled, “Capital Markets in a Pandemic,” he noted that Nigeria’s economy in the last three months was facing dwindling crude oil prices and that the coronavirus pandemic had led to foreign investors’ exit from the capital market. He said: “During the lockdown, we kept the capital market opened.
We immediately activated business continuity plans and luckily for us, the evolution of technology and digitalization at all capital markets globally started before the pandemic. We were able to quickly flip the switch and go completely remote.
“We were reaching out to our dealing member firms electronically and supporting corporates that are listed on the exchange and putting out market moving information. “We engaged with policy makers and regulators to provide various palliatives and accommodations for market players to continue to drive liquidity in the market.
“What we have seen as a result is that there has been a significant increase in activities in the capital market at secondary level, driven by domestic players.” He said these challenges mounted significant pressure on the capital market volatility, stressing that The Exchange sustainability in operations played a critical role at domestic participation. He expressed that the exchange remote trading and engagement of market stakeholders was yielding results, with increased domestic investors’ participation and federal/ state governments’ decision to access bonds on the capital market.