SAT, SEPT 30 2023-theGBJournal | Total transactions in the domestic equities market dropped to a five-month low, declining by 62.7% m/m to N262.56 billion in August (July: N702.99 billion), according to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX).
This time, the local investors led the decline, as domestic transactions (85.8% of gross transactions) declined by 66.0% m/m to N225.40 billion (July: N662.45 billion).
At the same time, foreign transactions (14.2% of gross transactions) recorded their second consecutive month of decline, falling by 8.3% m/m to N37.16 billion in August (July: N40.54 billion) as the government’s reform-induced momentum slowed, dampening foreign sentiments.
We 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.
Simultaneously, while foreign investors will likely continue to adopt a wait-and-see approach in the near term, we expect to see improvement in foreign participation over the medium term.
Our medium-term expectation is hinged on the expectations of positive policy pronouncements and reforms by the current administration.
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