MON, 29 AUG, 2022-theGBJournal| According to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), total transactions in the domestic equities market fell for the second consecutive month, declining by 35.4% m/m to N101.18 billion in July (June: NGN156.52 billion) – the lowest monthly outturn since August 2021 (N89.42 billion).
The decline 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. Accordingly, there was a noticeable decline in the domestic (-37.5% m/m; 70.7% of total transactions) and foreign (-29.7% m/m; 29.3% of total transactions) investors’ participation.
Notably, we highlight that the gross domestic transactions in July (N71.50 billion) were 66.4% less than the 2022 average (N212.87 billion) and the lowest in 12 months. In the short to medium term, 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 and interest rate hikes by central banks in developed countries.-With Cordros report
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