NGX Reports Lowest Foreign Participation In January

Latetest domestic and foreign investment report released by the Nigerian Exchange Limited (NGX) has shown that foreign participation in the nation’s stock market fell to 8.5% in January 2024.

Gatekeepers News reports that during the same period, domestic investors continued to dominate transactions in the market, accounting for a total value of N598.41 billion.

Despite recording higher foreign investors-related transactions of N53.1 billion in January 2024, as compared to N24.9 billion in the same period in 2023, foreign investors contributed just 8.5% to total transactions, the lowest level on record. This significant drop in foreign participation can be attributed to the cautious approach adopted by foreign investors amid the persistent volatility in the Nigerian market.

Further analysis of the report indicates that domestic transactions surpassed those executed by foreign investors by a substantial margin of N545.3 billion, representing a significant difference of 1026.74%. The subdued participation of foreign investors can be attributed to the prevailing economic uncertainties in the country, which have led many foreign investors to minimize their market exposure by remaining on the sidelines.

Despite these challenges, the dominance of domestic transactions highlights the resilience and confidence of local investors in navigating the prevailing market conditions. The figures indicate that local investors are still optimistic about the prospects of the Nigerian market, despite the uncertainties.

January transactions

As of 31 January 2024, total transactions at the nation’s bourse increased by 89.45% from N343.90 billion (about $382.59 million) in December 3 2023 to N651.52 billion (about $479.99 million) in January 2024.  

• The performance of the current month when compared to the performance in January 2023 (N195.10 billion) revealed that total transactions increased significantly by 233.94%.
• In January 2024, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 84%.
• A further analysis of the total transactions executed between the current and prior month (December 2023) revealed that total domestic transactions increased by 102.15% from N296.03 billion in December to N598.41 billion in January 2024.
• Total foreign transactions also increased by 10.95% from N47.87 billion (about $ 53.26 million) to N53.11 billion (about $39.13 million) between December 2023 and January 2024.

Institutional and retail investors 

According to the report, Institutional Investors outperformed Retail Investors by 4%.  

A comparison of domestic transactions in the current and prior month (December 2023) revealed that retail transactions increased by 211.73% from N91.61 billion in December to N285.58 billion in January 2024.  

Similarly, the institutional composition of the domestic market increased by 53.03% from N204.42 billion in December 2023 to N312.83 billion in January 2024. 

Performance in a decade

Highlights of the performance of the market over the last decade showed that over a sixteen (16) year period, domestic transactions decreased by 10.94% from N3.556 trillion in 2007 to N3.167 trillion in 2023 whilst foreign transactions also decreased by 33.28% from N616 billion to N411 billion over the same period. 

Total domestic transactions accounted for about 89% of the total transactions carried out in 2023, whilst foreign transactions accounted for about 11% of the total transactions in the same period.