Nigeria bourse executes $813.87m transactions in November despite weak foreign participation

By Charles Abuede

• Total transactions increased by 29.77% from $634.6m in October 2020 to$817.9m in November
• Domestic transactions on the local bourse rose to N1.24 trillion in 11 months.

Despite weakened participation of foreigners in the capital market, a recent data from the Nigerian Stock Exchange (NSE) shows that as at the close of November 2020, total transactions at the local bourse increased by 29.77 per cent to $813.87 million (N317.81 billion) from N244.90 billion or about $634.55 million in October 2020 on a monthly basis.

Based on trading figures from market operators polled by the NSE on domestic and foreign portfolio investment flows, the performance of the current month compared on year-to-date basis to the performance in November 2019 (N172.52 billion), shows that total transactions on the bourse increased by 84.22 per cent.

The NSE data also shows that in November 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 58 per cent with 79 per cent and 21 per cent going to domestic and foreign transactions respectively.

Also, during the month under review, a total of N135.96 billion flowed into the market from domestic investors and N25.54 billion worth of transaction flowed into the exchange through foreign investors. While total transactions worth N114.54 billion exchanged hands through local investors, flowing out of the exchange, foreigners repatriated N41.77 billion from the market.

A further analysis of the total transactions executed between November and October 2020 revealed that total domestic transactions increased by 53.51 per cent from N163.18 billion in October to N250.50 billion in November 2020. Total foreign transactions, however, decreased by 17.63 per cent from N81.72 billion (about $211.75million) to N67.31billion (about $172.38million) in the two months under review.

The report on domestic and foreign participation in equity trading on the local bourse further unveiled that institutional investors outperformed retail investors by 16 per cent. A comparison of domestic transactions in the current and preceding month (October 2020) showed that retail transactions increased by 52.10 per cent from N69.94 billion in October 2020 to N106.38 billion in November 2020. The institutional composition of the domestic market increased by 54.57 per cent from N93.24 billion in October 2020 to N144.12 billion in November 2020.

A historical analysis of domestic and foreign transactions paints the feat attained by the market over the last decade. The breakdown in the NSE report over a thirteen (13) year period highlight a decrease in domestic transactions by 72.30 per cent from N3.56 trillion in 2007 to N985 billion in 2019, whilst foreign transactions increased by 53.08 per cent from N616 billion to N943 billion over the same period.

Nevertheless, the total domestic transactions accounted for about 51 per cent of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49 per cent of the total transactions in the same period.

Notwithstanding the foregoing, the actual performance for 2020 shows that total foreign transactions carried out year-till-date (YTD) is about N659.28 billion, whilst total domestic transactions YTD is about N1.24 trillion.