Business

Local investors' transactions in equities hit N2.9 trillion in one year

As capital flight, triggered by legacy issues of foreign exchange (FX) liquidity and other macroeconomic challenges continue to take toll on foreign transactions, total domestic transactions on the bourse in 2023 hit N2.9 trillion, higher than N362.8 billion recorded by foreign transactions in the same period.

Total domestic transactions accounted for about 84 per cent of the total transactions carried out in 2022, while foreign transactions accounted for about 16 per cent of the total transactions in the same period.

The November edition of the NGX report on domestic and foreign portfolio participation in equities showed that domestic transactions on the Nigerian Exchange Limited (NGX) decreased by 45.3 per cent over 16 years, from N3.6 trillion in 2007 to N1.9 trillion in 2022.

While domestic transactions declined by 45.3 per cent from 2007 to 2022, foreign transactions also fell by 38.5 per cent, from N616 billion to N379 billion in the same period.

As at November 30, 2023, total transactions at the nation’s bourse increased by 34.08 per cent from N220.9 billion (about $243.93million) in October 2023 to N300.7 billion (about $319.15million) in November 2023.

The November 2023 performance when compared to the performance in November 2022 (N104.28 billion) revealed that total transactions increased by 188.3 per cent.

Further analysis of the total transactions executed between November and prior month revealed that total domestic transactions increased by 22.24 per cent from N187.6 billion in October to N229.30 billion in November 2023.

Similarly, total foreign transactions increased by 113.9 per cent from N33.36billion (about $36.83million) to N71.37 billion (about $75.76million) between October 2023 and November.

Also, institutional investors outperformed retail investors by 20 per cent. A comparison of domestic transactions in November and prior month (October 2023) revealed that retail transactions increased by 7.3 per cent from N86.5 billion in October to N92.8 billion in November 2023.

Similarly, the institutional composition of the domestic market increased by 35.01 per cent from N101.12 billion in October 2023 to N136.5 billion in November 2023.

Reacting to the report, the President of the Ibadanzone Shareholders Association of Nigeria, Eric Akinduro, said both local and foreign investors are exiting Nigeria to establish businesses in the neighboring countries due to the nation’s unfavourable business environment.

“The operating environment is not conducive for business and investors both domestic and foreign are not charitable organisations. They are currently moving to a more viable economy so that they can maximise profit.

“Unless we restructure our economy, the issue of foreign exchange crisis in Nigeria will continue to constitute a disincentive to investment in Nigeria.

“High inflation rate will affect the performance of the companies which would ultimately affect the return on investment. Government has to take drastic measures to revive the economy,” he said.

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