• Tuesday, July 23, 2024
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BusinessDay

Nigerian stocks fall out of favour as foreign outflow hits all year high

NG Clearing Limited paves way for trading Exchange Traded Derivative products

Activities on the nation’s bourse continued a tepid performance in the month of October as figures released by the Nigerian Stock Exchange show foreign outflows hit N65.88bn, the highest since January while foreign Inflow stood at N37.85billion. Value of domestic retail transaction also plunged to N18.23bn in October, the lowest year to date.

In the period, the total value of transactions executed by foreign investors in the month of October outperformed transactions executed by domestic investors by 28percent to hit an all-year high of N103.73billion while domestic investors could only manage N59.43billion.

In all the total value of transactions at the nation’s bourse increased by 15.35percent from N141.45 billion in September to

N163.16 billion in October. The performance when compared to the performance in the same period last year shows that total transactions increased by 34.34percent.

Foreign investors are adopting a cautious and active trading strategy,” said Gbolahan Ologunro, an equity research analyst at CSL Stockbrokers, the investment arm of FCMB Group Plc. “This strategy involves buying when there are opportunities in the market and cashing out almost immediately.”

Nigeria’s economy continued to gasp for growth after it came out of a recession in 2017. The country’s stock benchmark index, the All Share Index (ASI), has dropped more than 16 percent since the start of this year after a 17.8 percent decline recorded in 2018, creating good entering points for investors in fundamentally sound stocks.

Comparatively, the total transactions executed between October and September revealed that total domestic transactions increased by 26.45percent from N47.00 billion in September to N59.43billion in October. During these two periods, foreign transactions increased by 9.83percent from N94.45 billion to N103.73 billion between September and October.

Analysis over a twelve year period, shows domestic transactions decreased by 66.68percent from N3.556t in 2007 to N1.185t in 2018 whilst foreign transactions increased by 97.88percent from N616bn to N1.219t over the same period.

Total foreign transactions accounted for about 51percent of the total transactions carried out in 2018, whilst domestic transactions accounted for about 49percent of the total transactions in the same period.

The value of domestic transactions executed by Institutional investors outperformed retail investors by 38percent.

A comparison of domestic transactions in the month of September and October showed 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.