Equities valued at N1.627trillion were exchanged by investors (both foreign and local) in the 10 months ended October 31, 2019, a huge decline of about N501billion as against N 2.128trillion exchanged same period in 2018.
During this period, the stock market remained pressured given global risk-off sentiments and weak domestic participation.
Despite that most stocks valuations remained attractive during this period, many long-term investors still failed to buy stocks, thereby losing the gains that would have accrued to them amid recent price rally.
Despite pockets of profit taken actions by investors, the Nigerian equities market recently witnessed increased buy decisions spurred by CBN’s policy that stopped non-bank financial institutions from participating in OMO auctions.
In the review 10 months period, foreigners traded N792.64billion worth of stocks, which represent inflow of N363.9billion and outflow of N428.8billion.
The Nigerian Stock Exchange (NSE) has just released its polls trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows.
Domestic investors exchanged stocks valued at N834.94billion; details show that domestic retail investors accounted for stock trades valued N420.64billion while domestic institutional investors traded N414.3billion worth of equities in the same 10 months period.
Earlier this week, the National Bureau of Statistics (NBS) published Nigeria’s inflation report for October 2019, which was much in line with analysts’ expectation. The headline inflation rate rose to 11.61percent year-on-year (y/y) compared to 11.24percent recorded in September 2019.
“Certainly, a negative interest rate environment will discourage investors from looking for cheap returns, even though risk-averse investors will continue to play in the space.
Read also: Top 10 brokers record 125% rise in transactions as more stocks gain on NSE
“As such, we expect recent pressure on headline inflation to further spur interest in riskier assets such bonds and equities which are more attractive in terms of real returns amid increased system liquidity spurred by the CBN’s decision to shrink its balance sheet”, said Lagos-based research analyst at United Capital in their November 19 note.
According to the NSE report, as at October 31, 2019 the total transactions at the nation’s bourse increased by 15.35percent month-on-month (mom) from N141.45 billion (about $461.50 million) in September 2019 to N163.16 billion (about$532.35 million) in October 2019.
The performance of the review month of October when compared to the performance in the same period (October 2018) of the prior year revealed that total transactions increased by 34.34percent.
In October 2019, the total value of transactions executed by foreign investors outperformed transactions executed by domestic investors by 28percent.
Still on a monthly basis, further analysis of the total transactions executed between the current and prior month (September 2019) revealed that total domestic transactions increased by 26.45percent from N47billion in September to N59.43billion in October 2019. Similarly, total foreign transactions increased by 9.83percent from N94.45 billion (about $308.2million) to N103.73 billion (about $338.4million) between September and October 2019.
The value of domestic transactions executed by institutional investors in October 2019 outperformed that of retail investors by 38percent.
A comparison of domestic transactions in the review and preceding months (September 2019) revealed that retail transactions decreased by 21.96percent from N23.36 billion in September 2019 to N18.23 billion in October 2019.
However, the institutional composition of the domestic market increased significantly by 74.28percent from N23.64 billion in September 2019 to N41.20 billion in October 2019.
