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Equities Market: Domestic investors take charge as foreign sell off persist in April

As global markets continue to grapple with the impact of COVID-19 spread, the Nigerian equities market last month showed some resilience in the face of severe disruption in economic activities due to the ravaging pandemic, as domestic investors dominated market activities on the back of cheaper valuations, attractive dividend yield and low fixed income yields.

Figures released by the Nigerian Stock Exchange in its domestic & foreign portfolio investment report for the month of April show that although total transactions at the nation’s bourse decreased by 47.03percent from N242.91billion in March to N128.67billion in April 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors.

Specifically, domestic investors account for 58.67percent of the total transaction at the nation’s bourse in April as compared to 41.33percent by foreign investors. Largely, foreign investors’ appetite remained weak, owing to increased macroeconomic fragilities concerns on stability of the currency, while the few that participated were forced by the inability to get dollars for repatriation, forcing some to reinvest their funds,

The total transactions executed between the period under review and March revealed that total domestic transactions decreased by 43.11percent from N132.69 billion in March to N75.49 billion in April 2020. Also, total foreign transactions decreased by 51.75 percent from N110.22 billion to N53.18 billion between March and April 2020 as an intensified sell-off by foreign investors on the back of elevated global risk aversion for emerging markets and frontier markets assets persist.

The sell off by foreign investors, however, provided an entry point for domestic investors as shares of bellwethers stocks came crashing.

Value of domestic transactions executed by retail Investors outperformed Institutional Investors by 8percent. A comparison of domestic transactions in the current and prior month (March 2020) revealed that retail transactions decreased by 32.89percent from N60.23 billion in March 2020 to N40.42 billion in April 2020. Similarly, the institutional composition of the domestic market decreased by 51.60percent from N72.46 billion in March 2020 to N35.07 billion in April 2020.

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