SAT OCT 12 2024-theGBJournal|Total transactions in the domestic equities market declined by 22.8% m/m to N379.52 billion in August (July: N491.61 billion), according to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX).
Analysts at Cordros Research think the lower participation in the local bourse reflects the dual impact of higher yields in the fixed-income market and lingering FX liquidity constraints.
Parsing through the breakdown provided, we highlight that domestic transactions (84.9% of gross transactions) dropped by 25.8% m/m to N322.05 billion (July: N434.09 billion) following contraction of 33.5% m/m and 12.9% m/m across inflows from retail and institutional investors respectively.
Similarly, collections from foreign transactions (15.1% of gross transactions) edged lower by 0.1% m/m to N57.47 billion in August (July: N57.52 billion), signaling the third consecutive month of contraction.
While we expect domestic investors to continue to contribute the bulk of total transaction value, buying activities will likely be constrained by elevated yields in the fixed-income market following the MPC’s tight monetary policy stance.
On the other hand, we expect FX liquidity constraints and naira volatility to limit foreign investor participation in the equities market.
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