Trading in the Nigerian equities market experienced a significant drop in the past five months. According to data obtained from the Domestic & Foreign Portfolio Investment Report of the Nigerian Stock Exchange (NSE), the drop was experienced as investors continue to weigh potential returns against macroeconomic risks.
Transaction Value: The total transactions of value for the five months period ended Friday, May 31, 2019, stood at N790.31 billion compared to N1.409 trillion recorded in the corresponding period of 2018. This, however, represents a drop of 44 percent.
Breakdown of the Value: The data indicated a slowdown in both foreign and domestic participation in the equities market.
Total transactions by foreign portfolio investors halved from N697.3 billion in the first five months of last year to N376.05 billion in the first five months of this year. This represented a drop of 46.07 percent.
Total domestic transactions also halved from N712.17 billion recorded in the five-month period ended May, last year to N414.25 billion in the first five months of the year. This represents a drop of 41.8 percent.
Further analysis showed that domestic investors continued to dominate transactions during the period. Domestic investors contributed 51.02 percent of total transactions during the period ended May 2019, inching up from 50.53 percent recorded during the period ended May 2018.
Foreign participation, however, dropped slightly from 49.47 percent last year to 48.98 percent this year.
Any hope of recovery? Looking at the future in a short to medium term form, analysts at Cordros Securities believe that the Nigerian equities market has hope of recovery. According to them, the outlook for the equities market is conservative. They cited the absence of an immediate positive catalyst.
“We reiterate our view that the blend of a compelling valuation story, together with positive macroeconomic picture leaves scope for market recovery in the medium term. However, we guide investors to tread the cautious trading path in the short term.” — Cordros Securities