The Nigeria stock exchange (NSE) market drove a year-end bull run in 2020 despite the outbreak of the Covid-19 pandemic which caused a major downturn in the country’s economy.
Amongst 93 global equity indices monitored by Bloomberg, the NSE All-Share Index (ASI) appeared as the best-performing index in the world, surpassing the S&P 500 (+16.26%), Dow Jones Industrial Index (+7.25%), and other global and African market indexes, to post a one-year return of +50.03%.
Despite the strong performance by the bourse in the previous year, domestic and foreign portfolio dipped significantly in the month of January 2021. This is according to the NSE domestic and foreign portfolio investment report published on its website.
Specifically, the total transactions in the month of January 2021 stood at N232.46 billion, a 13.7% decline compared to N269.24 billion recorded in the previous month.
Also, total foreign transactions in the equities market stood at N47.52 billion in January 2021. This represents a decline of 32% when compared to N69.92 billion recorded in December 2020 and a 32.4% decline compared to N70.32 billion in the corresponding period of 2020.
- Total foreign transactions in the month of January stood at N47.52 billion, while domestic transactions stood at N184.94 billion.
- Foreign transactions accounted for 20.44% of the total transactions recorded in the bourse, a decline compared to 25.97% and 29.86% recorded in December 2020 and the corresponding period of 2020 respectively.
- On the other hand, domestic transactions accounted for 79.56% in the month under review, an increase compared to 74.03% and 70.14% recorded in December 2020 and January 2020 respectively.
- Foreign inflows dipped by 20.9% from N21.14 billion recorded in December 2020 to N16.73 billion in January 2021.
- Also, foreign outflows decreased by 36.9% to stand at N30.79 billion in January 2021.
- However, domestic transactions stood at N184.94 billion in January 2021. This represents a 7.2% decline compared to N199.32 billion recorded in the previous month while it increased by 11.9% compared to the corresponding period of 2020.
According to the report, Institutional Investors outperformed Retail Investors by 28%. A comparison of domestic transactions in the current and prior month (December 2020) revealed that retail transactions increased by 10.16% from N61.22 billion in December 2020 to N67.44 billion in January 2021.
Also, the institutional composition of the domestic market decreased by 14.91% from N138.09 billion in December 2020 to N117.5 billion in January 2021.
A look at Historic data shows that over a fourteen (14) year period, domestic transactions decreased by 59.54% from N3.556 trillion in 2007 to N1.439 trillion in 2020 whilst foreign transactions increased by 18.45% from N616 billion to N729 billion over the same period.
Why this matter
The performance of the stock market in 2020 was met with caution as the All-share index of the Nigerian Stock Exchange declined in the first month of 2021. This could be attributed to profit-taking move by stock market investors and uncertainty surrounding the Nigerian economic landscape.
Union Bank, LINKASSURE push NGX ASI into recovery
The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM.
Nigerian stock exchange market made a bullish recovery on the last day of the week’s trading session. This surge was bolstered by gains made by UBN and LINKASSURE amongst others. The All-Share Index increased by +0.21% to close at 39,198.75 from 39,114.73.
- Nigerian Stock Exchange market value currently stands at N20.48 trillion. Its Year-to-Date (YTD) returns currently stand at -2.66%.
- The market breadth closed positive with the bulls as LINKASSURE led 25 Gainers, and 16 Losers topped by NEM, showing a hint of consolation.
- LINKASSURE up +9.25% to close at N0.69
- JOHNHOLT up +9.26% to close at N59
- UBN up +9.09% to close at N5.40
- ROYALEX up +8.33% to close at N0.65
- CHIPLC up +8.33% to close at N0.39
- NEM down -9.50% to close at N1.81
- COURTVILLE down -9.09% to close at N0.20
- SUNUASSUR down -8.47% to close at N0.54
- INITSPLC down -6.98% to close at N0.40
- ETERNA down -6.89% to close at N5.81
The market recovered from a week-long loss as it posts profit at the end of the trading session.
- Market sentiments tend toward bullish momentum as the NGX ASI closes with 25 Gainers and 16 losers.
- Nairametrics however, advises cautious buying in this era of growing uncertainties.
SEC plans to monitor foreign stock brokers in Nigeria
SEC is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.
In an attempt to reduce the demand for foreign stocks in Nigeria, the Securities and Exchange Commission (SEC) is proposing tighter and stricter regulatory oversight and requirements for foreign stockbrokers in the country.
In an interview monitored by Nairametrics, the executive commissioner for operations of the SEC, Dayo Obisan revealed the commission was planning to actively monitor the local facilitators of foreign stocks.
“At least 400,000 Nigerians have invested in foreign stocks through brokers in the past 18 months,” Obisan said, with Nigerians actively trading or holding foreign equities now exceeding those investing in the local market and about 70% of these participants being less than 40 years of age.
This is despite the Nigerian Stock Exchange being dubbed the best performing last year after it gained 50% YTD. Stocks are however down 5% YTD.
In contrast, the S&P 500 Index is currently trading 14.50% YTD, creating a new all-time high.
Also, the value of transactions is down YTD as demand shifts from the Nigerian stock exchange market to the Cryptocurrency and foreign stock market.
“There is an increasing interest among the younger population and this is of concern to the commission primarily because it creates an avenue for exploitation,” Obisan said.
The SEC intends to license firms offering foreign stocks under a “digital sub-broker” regulation, which Obisan says should provide a form of clarity to their activities.
He also stated the requirement will ensure “regulatory responsibilities in on-boarding clients, custody of assets, and compliance with reporting requirements are met”.
Nairametrics | Company Earnings
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