In the recently released NSE Domestic & Foreign Portfolio Investment Report for September, total value traded surged in line with expectations as value traded grew 42.9% m/m to N135.0bn (US$350.6m) in September 2020 from N94.5bn (US$245.5m) in August 2020.
Activity level among domestic investors grew 71.1% m/m to N94.9bn (US$246.5m) while foreign investor transactions grew 2.7% m/m to N40.1bn (US$104.2m).
Domestic investors retained dominance of trading activities on the local bourse as their share of total transactions in September stood at 70.3% (YTD; 61.8%) while foreign investors’ share of total transactions was 29.7% (YTD; 38.2%).
On the domestic front, transactions were dominated by institutional investors who traded N59.2bn (US$153.8m) while retail investors executed transactions worth N35.7bn (US$92.7m). We note that volume of transactions among retail and institutional investors grew 34.1% and 105.2% respectively. Foreign outflows increased to N26.1bn (US$67.8m) in September compared with N21.3bn (US$55.3m) in August. Foreign inflows decreased to
N14.0bn (US$36.4m) in September from N17.7bn (US$46.0m) in August resulting in a net outflow of N12.1bn (US$31.4m) in September compared with a net outflow of N3.7bn (US$9.6m) in August.
The surge in activity level supported a strong bullish performance in the local bourse in September. The benchmark All Share Index gained for the fifth consecutive month, climbing higher by 6.0% in September. In September, OMO maturities of N1.3tn hit the financial system which provided a number of local institutional buyers with some liquidity to take positions in undervalued stocks which led to price upticks across large cap stocks.
Going forward, we expect local institutional investors to continue to dominate activities in the domestic bourse. However, we note the robust liquidity driven by huge OMO maturities would begin to subside in November as CBN’s ban on domestic non-bank investors from accessing the OMO window started in November 2019, which means local investors no longer expect OMO maturities after November.
That said, we think the local bourse’s performance in the last quarter would be largely dictated by the Q3 financial performance of bellwether stocks.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
