By Chinwendu Obienyi
Despite lingering FX liquidity constraints and heightened global uncertainties, total domestic transactions on the Nigerian Exchange Limited (NGX) rose by 1.820 trillion in eleven months of 2022.
This is according to the Domestic and Foreign Portfolio Investment Report of Nigerian Exchange Limited (NGX) for the month of November 2022.
The report revealed that the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 72 per cent. A further analysis of the total transactions executed between the current and prior month (October 2022) revealed that total domestic transactions increased significantly by 10.31 per cent from N81.54 billion in October to N89.95 billion in November 2022.
Furthermore, domestic inflow and outflow for the month of November 2022 stood at N43.07 billion and N46.88 billion as against N8.91 billion and N5.52 billion recorded by foreign inflow and outflow respectively.
However, total transactions at the nation’s bourse decreased by 5.19 per cent from N110.09 billion (about $248.50 million) in October 2022 to N104.38 billion (about $234.88 million) in November 2022.
The performance of the current month when compared to the performance in November 2021 (N196.14 billion) revealed that total transactions decreased by 46.78 per cent.
The decline continues to reflect the trifecta impacts of higher yields in the fixed-income market, lingering FX liquidity constraints, and heightened global uncertainties. Accordingly, foreign transactions decreased by 49.46 per cent from N28.55billion (about $64.45 million) to N14.43 billion (about $32.47 million) between October 2022 and November 2022.
Over a 15-year period, domestic transactions decreased by 58.80 per cent from N3.556 trillion in 2007 to N1.465 trillion in 2021 whilst foreign transactions also decreased by 29.38 per cent from N616 billion to N435 billion over the same period. The report revealed that total domestic transactions accounted for about 77 per cent of the total transactions carried out in 2021, whilst foreign transactions accounted for about 23 per cent of the total transactions in the same period.
“The transaction data for 2022 shows that total domestic transactions are circa N1.820 trillion, whilst total foreign transactions are circa N364.02 billion”, it said.
Reacting to the development, analysts at Cordros Research, said, “We expect domestic investors to continue to dominate market performance over the short-to-medium term, although rising fixed income yields may constrain buying activities. Also, FPIs who have exhibited a lacklustre interest in domestic equities are likely to remain on the sidelines due to sustained FX liquidity challenges, global uncertainties, election concerns and interest rate hikes by central banks in developed countries.”