Nigerian Domestic Stock Transactions Surge to N1968.4bn YTD, Foreign Investors Remain Cautious Amid Forex Challenges”
Domestic transactions on the Nigerian Exchange Limited have soared to N1968.4 billion year-to-date, surpassing the entire value of transactions by domestic investors in 2022, which was N1945 billion. Foreign investors, on the other hand, remain cautious and are shying away from Nigeria due to ongoing forex challenges exacerbated by the floating of the Naira. This revelation comes from the latest Domestic & Foreign Portfolio Investment Report released by the Nigerian Exchange Limited for July 2023.
According to the report, despite the challenging forex environment, domestic investors continue to dominate the local bourse, with foreign investors largely staying on the sidelines. Transaction data for 2023 reveals that domestic transactions have reached approximately N1.968 trillion, while total foreign transactions are around N185.62 billion.
In a notable month-on-month increase, domestic transactions on the Nigerian Exchange surged by 83.5 percent in July, reaching N662.44 billion from N361.01 billion in June 2023. However, foreign inflows dwindled to N9.45 billion in July, a sharp drop from N22.72 billion in June. The declining trend in foreign inflows has been observed for several months, with May being an exception when inflows briefly increased to N27.51 billion.
Total foreign transactions saw a marginal decrease of 11.37 percent between June and July 2023, dropping from N45.74 billion to N40.54 billion. Nonetheless, the overall market performance remains robust, with total transactions at the nation’s bourse surging by 72.83 percent from N406.75 billion in June 2023 to N702.98 billion in July 2023.
Comparing the current month’s performance to July 2022, total transactions have increased by an impressive 594.78 percent. In July 2023, Domestic Investors led the market, outperforming Foreign Investors by approximately 88 percent.
Okechukwu Unegbu, a financial expert, expressed concern over the dwindling interest of foreign investors in Nigeria. He attributed this trend to the severe forex scarcity in the country, emphasizing that the reduced foreign reserves and lack of forex liquidity are deterring foreign investors from entering the market.