MON, 10 OCT, 2022-theGBJournal| According to the Domestic and Foreign Portfolio Report of the Nigerian Exchange (NGX), total transactions in the domestic equities market increased by 22.5% m/m to N123.97 billion in August (July: N101.18 billion).
Still, the print is significantly below the average monthly gross transactions (N235.88 billion) so far in 2022, reflecting the troika impact of higher yields in the fixed income market, lingering FX liquidity constraints, and a lack of flexibility in the FX framework.
For the review month, we highlight that the domestic transactions (77.2% of gross transactions) increased by 33.9% m/m to N95.76 billion while foreign transactions (22.8% of gross transactions) fell by 5.0% m/m to N28.21 billion.
Notably, domestic investors were net sellers of equities since the MPC of the CBN started increasing the MPR, safe for July. 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.
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