Equity Market Shake-Up: Domestic Investors Steal the Show, Foreigners Left Cautious – NGX Report Reveals
The allure of foreign investments in equities has taken a hit due to ongoing macroeconomic challenges, as revealed in a recent report by the Nigerian Exchange Limited (NGX) on MarketNewsNG. The data highlights a notable shift in the market landscape, with domestic investors outshining their foreign counterparts, commanding an impressive 88 percent share of the total turnover.
In July, the Domestic and Foreign Portfolio Investment report from the NGX, now available on MarketNewsNG, exposed an intriguing trend. Domestic transactions surged to N662.4 billion, marking an 83.5 percent surge compared to June’s N361 billion. Conversely, foreign transactions witnessed a minor dip of 11.4 percent, slipping from N45.74 billion to N40.54 billion.
The market’s performance over the past 16 years, as analyzed in the report, further underscores this evolving dynamic. Domestic transactions dwindled by 45.3 percent from N3.556 trillion in 2007 to N1.945 trillion in 2022. Simultaneously, foreign transactions saw a 38.5 percent decline, moving from N616 billion to N379 billion during the same period.
A glimpse into the year 2023, as outlined in the report, reveals a notable shift. Total transactions at the exchange surged by an impressive 72.8 percent, leaping from N406.8 billion in June to N702.9 billion in July. The contrast with July 2022 is striking, as this year’s figures have skyrocketed by an astounding 594.8 percent.
Opinion:
The dynamics unveiled in the MarketNewsNG-featured NGX report serve as a compelling testament to the prevailing economic climate’s influence on investor sentiments. The dominance of domestic investors could be attributed to recent macroeconomic reforms that have sparked renewed interest among local participants. On the flip side, foreign investors appear to be exercising caution due to lingering challenges, including unremitted dividends and profits. The surge in domestic transactions is indicative of the population’s growing enthusiasm for the equity market. However, this exuberance might be short-lived, as concerns persist about the potential negative effects of ongoing reforms on corporate fundamentals. As the market navigates this evolving landscape, addressing the underlying macroeconomic issues will be pivotal in fostering sustained growth, attracting foreign investments, and ensuring a balanced market performance.