SAT 28 AUG, 2021-theGBJournal- According to the July Domestic & Foreign Portfolio Investment report of the Nigerian Exchange Limited (NGX), total transaction value at the local bourse declined by 10.9% m/m to NGN89.77 billion in July (June: NGN100.77 billion) – the lowest since April 2017 (NGN59.40 billion).
On the one hand, FX liquidity challenges drove foreign transactions (NGN15.53 billion vs June: NGN23.42 billion) to their lowest level since at least 2013, when the NGX started keeping the transactions records. On the other hand, the decline in domestic transactions (NGN74.24 billion vs June: NGN77.35 billion) was driven by a reduction in the value of transactions executed by institutional investors (down 11.2% m/m; 49.4% of gross domestic transactions).
The decline in fixed income instruments yields bodes well for the equities market over the short to medium term. Similarly, we expect the FX liquidity challenges to improve on account of expected inflows from IMF’s SDR allocation and Eurobond issuance. Accordingly, we see scope for improved activities from both the domestic and foreign investors over the medium term.
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