In the eight-month period leading up to August 31, 2023, the value of listed equities traded in Nigeria reached a significant high of N2.42 trillion. This marks an increase from the N1.89 trillion recorded during the same period in 2022, as reported by the Nigerian Exchange Limited (NGX).
The Nigerian equities market has experienced a generally positive sentiment since May, which has continued throughout August. However, in September, investors witnessed a decline in the value of their investments by N91 billion, as the market dropped by 0.25 percent.
This decrease followed sessions of profit-taking after the market’s rally in August.The administration of President Bola Ahmed Tinubu has adopted a pro-market stance, which has bolstered confidence and optimism among stock investors in the equities market.
As a result, Nigeria’s equities market capitalisation has increased by approximately N8.5 trillion during this period.
The stock market, which saw sections of profit-taking and bargain hunting had reached a 15-year high in August. The market had recently defied optimism expressed by Olayemi Cardoso, governor, the Central Bank of Nigeria (CBN).
This came as investors who still anticipate the next phase of the driver for market remain cautious over the nation’s macroeconomic outlook, especially happenings at the foreign exchange (FX) market which directly affects foreign investments in stocks.
After the Independence Day holiday, the FX market opened on Tuesday, October 3 with the dollar trading at N1,000 at the parallel segment of the market as against N1,008/$ it exchanged last Friday.
The apex bank governor had on confirmation by the Senate expressed optimism over the economy and measures to stabilise the volatile FX market. He promised to pull back from aggressive development finance, ensure a culture of transparency, compliance and collaboration and to embark on zero tolerance for breach of the CBN Act.
He also set his immediate priority to include aggressive offset of huge FX obligations as part of measures to attack the current naira downturn which has become a huge burden for the economy.
A further look at the recent data on domestic and foreign portfolio participation in Nigeria’s equity trading in the eight-month period to August 31, 2023, shows stock trading by foreigners was valued at N222.78billion or 9.22percent of the total value trade while local investors were responsible for stock trading worth N2.193btrllion or 90.78percent.
The domestic and foreign portfolio investment report is prepared on a monthly basis by NGX Regulation Limited, with trading figures from market operators on their domestic and foreign portfolio investment (FPI) flows.
In January 2023, stocks trading worth N195.10billion were recorded. In February it grew to N188.91billion, but decreased to N146.22billion in March. It rose again to N191.21billion in April, N322.92billion in May, and N406.75billion in June. The value of equities trading which reached N702.98billion in July decreased remarkably to N262.56 billion in August.