Data from the Central Bank of Nigeria (CBN) H1 activity report for the six months ended June 30, 2018 shows N798 billion worth of shares were traded for the half year ended June 2018.
This represents a 25.9% decline from the N1 trillion worth of shares traded in the first half of 2017.
Volumes and deals also dropped
646,835 transactions took place in 2018, as against the 878,223 transactions that took place in the first half of 2017. This represents a 26.3% decline year on year.
66.8 billion shares were traded in the first half of 2018, compared to the 93.2 billion shares traded in the previous year. This marks a 28.3% drop year on year.
Most actively traded sector
The financial services sector was the most actively traded in the first half of the year with 48.8 billion shares valued at N531 billion traded in 389,936 deals. The sector, thus accounted for 73% of total volume traded, 65% of value traded and 60.2% of the total number of deals.
Least actively traded sector
Construction/Real Estate was the least actively traded sector on the Nigerian Stock Exchange for the first half of the year accounting for 100 million shares valued at N817 million traded in 4,407 deals. This amounts to 0.14% of the total volume traded, 0.1% of value traded and 0.6% of the number of deals transacted.
Why is the financial sector dominant?
Though a breakdown of the financial services sector was not provided, it is largely dominated by banks. Investors (especially foreign investors) tend to favour banking stocks because they remain liquid and have enough volume for sizeable entry.
Despite the difficult macroeconomic environment in the last few years, the banks have been able to thrive.
The foreign exchange crisis of 2015/2016 led to huge foreign exchange revaluation gains. The Federal Government’s sharp increase in borrowing led to a spike in income from treasury bills.