With galloping inflation and dollar scarcity bedeviling the economy, Daily Sun investigations reveal that total foreign transactions on the Nigerian Exchange Limited (NGX)’s platform dropped to N321.04 billion in the first nine months of 2022.
According to the Domestic and Foreign Portfolio Investment (FPI) September 2022 report which captured these transactions, as well as trading figures from market operators, foreign transactions decreased by 29.38 per cent from N616 billion to N435 billion in 15 years (2007-2021).
On the other hand, total domestic transactions for the period under review stood at N1.65 trillion.
The Domestic and Foreign Portfolio Investment Report is prepared on a monthly basis by NGX Regulation Limited, with trading figures from market operators on their domestic and foreign portfolio investment (FPI) flows.
The report revealed that total foreign transactions decreased by 30.27 per cent from N28.21billion (about $65.77million) to N19.67billion (about $44.93million) between August 2022 and September 2022 while adding that total domestic transactions decreased significantly by 35.01 per cent from N95.76billion in August to N62.23billion in September 2022.
Furthermore, it noted that while domestic participation stood at 76 per cent, foreign participation stood at 24 per cent, highlighting the weak macro-economy.
Similarly, domestic inflows and outflows on the bourse stood at N30.84 billion and N31.39 billion as against foreign inflows and outflows which stood at N10.1 billion and N9.6 billion in the month of September 2022. As at 30 September 2022, total transactions at the nation’s bourse decreased by 33.94 per cent from N123.97 billion (about $289.04 million) in August 2022 to N81.90 billion (about $187.09 million) in September 2022.
A comparison of domestic transactions in the current and prior month (August 2022) revealed that retail transactions decreased by 14.14 per cent from N39.81 billion in August to N34.18 billion in September 2022.
Similarly, the institutional composition of the domestic market decreased by 49.87 per cent from N55.95 billion in August 2022 to N28.05 billion in September 2022.
Reacting to the development, economic analysts at Cordros Securities said the
persistent low market participants’ participation in the local bourse reflects the troika impact of higher yields in the fixed-income market, lingering FX liquidity constraints, and a lack of flexibility in the FX framework.
“Notably, domestic investors remain net sellers for the second consecutive month, while foreign investors’ participation is at its lowest level in 14 months. Looking ahead, we expect domestic investors to continue to dominate market performance, although rising FI 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, and interest rate hikes by Central banks in developed countries”, they said.
SOURCE: THESUN
