SAT, JAN 27 2024-theGBJournal|According to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), total transactions in the local bourse settled at N3.56 trillion in 2023FY, signalling a 53.9% y/y increase from the N2.32 trillion in 2022FY.
On a month-on-month basis, total transactions rose to a six-month high, expanding by 14.4% m/m to N343.90 billion in December (November: N300.67 billion).
Analyzing the breakdown, we highlight that the improvement was mainly due to a 29.1% m/m increase in domestic transactions to N296.03 billion (86.1% of total transaction value).
Precisely, the increase in domestic transactions was primarily driven by institutional investors (+49.7% m/m) amid a marginal contraction from retail investors (-1.2% m/m).
Meanwhile, foreign inflows remained weak, as foreign transactions declined by 32.9% m/m to N47.9 billion (November: N71.40 billion) due to the effect of the lingering FX liquidity constraints.
Cordros Research analysts say they expect domestic investors to continue to dominate the domestic equities market over the short-to-medium term, even as higher fixed-income yields may constrain buying activities.
Elsewhere, while we believe foreign investors will continue to adopt a wait-and-see approach in the near term, we envisage improved foreign participation over the medium term driven by expected FX inflows as guided by the authorities, CBN’s recent actions in clearing its FX backlogs, and firm direction of interest rates.
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