Stakeholders in the Nigerian capital market have urged the domestic investors, who left the market after the 2008/09 near-crash, to return to the bourse.
Nairametrics reported that the total transactions recorded in the Nigerian Stock Exchange (NSE) increased from N113.5 billion as at the end of July 2019, to N121.99 billion by the end of August 2019.
While foreign investors upped their investments from N57.7 billion to N63.9 billion, their domestic counterparts also increased transactions from N55.6 billion to N58.09 billion, which represent 10.7% and 4.3% respectively within the same period.
The spokesperson of Independent Shareholders of Nigeria (ISAN), Moses Igbrude, explained that it is not safe for any emerging market to allow foreign investors dominate its market as such development is prone to crash if there is instability in the global clime.
He said, “It is safe for domestic investors to return to the market now that most of the insurance stocks are penny stocks. It is only local investors that can safeguard the market because if the market is down, they won’t pull their funds from the market, unlike their foreign counterpart.”
The Chief Executive Officer (CEO), InvestData, Ambrose Omoriodon explained that since the meltdown and crash of the stock market in 2008/2009, the foreign portfolio investors have been dominating the NSE. This, according to him, is one of the factors the market has been unstable.
Omoriodon said, “The NSE investment report for August shows that foreign portfolio investors are more than domestic investors because they are taking advantage of the prevailing low prices to position themselves since local investors are struggling as a result of the weak economy and purchasing power as well as low liquidity.”
What you should know: From January 2019 till date, foreign portfolio investment has contributed N594.5 billion (44.93%) to the N1.32 trillion total investment recorded on the NSE. Domestic investment, however, gulped the highest with N728 billion (55.07%).