The Nigerian Exchange Limited (NGX) has released its monthly trading report, detailing the performance of both Domestic and Foreign Portfolio Investments (FPI) for August 2023.
The comprehensive data released shows a significant contraction in the total transaction value at the nation’s stock exchange, even though there are rays of optimism when the figures are compared to August 2022.
Key Highlights
- A sharp decline of 62.65% in total transactions from N702.98 billion in July 2023 to N262.56 billion in August 2023.
- Year-over-year growth of 111.79% compared to N123.97 billion in August 2022.
- Domestic investors outperformed foreign investors by 72%.
- Retail transactions dropped by 57.76% from N229.95 billion in July to N97.13 billion in August 2023.
- Institutional investments also saw a decline of 70.34% from N432.49 billion in July 2023 to N128.27 billion in August 2023.
Domestic Investors: The Driving Force but Decreasing
Just as it has been for the last few years, domestic investors continue to be the driving force in August, contributing 72% to the total transactions.
Despite this, there was a marked reduction in the value of domestic transactions, which fell by 65.97% from N662.44 billion in July 2023 to N225.40 billion in August 2023.
This declining trend may be a red flag for market analysts and investors alike.
On the foreign front, there was a lesser decline of 8.34%, with transactions dropping from N40.54 billion in July 2023 to N37.16 billion in August 2023.
This marginal dip might signify relative stability or ongoing confidence among foreign investors, even as the overall market shrinks.
Retail Vs. Institutional Investors: Who’s Pulling Back More?
The retail segment of the market, often considered the backbone of liquidity, witnessed a decline of 57.76% in transactions, falling from N229.95 billion in July 2023 to N97.13 billion in August 2023.
Institutional investors, usually a significant portion of market transactions, also saw a decline by 70.34%, from N432.49 billion in July 2023 to N128.27 billion in August 2023.
Optics
The drops suggest the massive influx of cash into equities that started after President Tinubu was sworn in, may have tapered off in August.
- At N262.5 billion, the total transactions are only bettered by the transactions in July and June respectively. January – April all recorded transactions below N200 billion,