26 July 2018 ( Lagos ) : The Nigerian Stock exchange has observed an outflow of N 419 billion by foreigners in a six months period to June’18, In spite of witnessing an inward investment of about N 380 billion in the same period.
This major sell-off attitude of domestic and foreign investors, is due to the atmosphere of caution, following the 2019 elections and the possible political instability which may bleed some risks to the economy as well.
Hopefully the H1’18 results of some of the listed firms, may exceed expectations, thereby giving some respite to the market which has already hit an 8-month low, as the market capitalization fell to N 13.2 trillion.( recorded yesterday ).
We expect a market rebound in the near future, as the Relative Strength index has already reached the oversold region( of about 30 points ). While the bearish sentiment prevailed in the market, throughout last week, mainly due to sell-pressure in bluechip stocks; this week the bulls opened the week, as Investors are making smarter investments in more fundamentally sound firms as more H1’18 scorecards are kicking in.
Speaking about the breakdown of domestic and foreign portfolio participation in equity trading, out of N 1.6 trillion value of stock traded, about N 799.7 billion worth of trade was made by foreign investors; whereas the domestic investors traded about N 797 47 billion worth of shares.
Breaking down the domestic portfolio participation further; while domestic institutional investors traded stocks worth N 483.65 billion in H1’18; domestic retail investors exchanged only N 313.84 billion worth of equity in H1’18.
Another way of putting it would be, on a MoM basis, while the institutional composition of the domestic segment reduced by 38.8% coming to N 56.2 billion from May’18 to June’18; whereas their retail counterpart reduced by 12.5% reaching a figure of N 29.12 billion during the same period. Theoretically, one would anticipate that since the domestic investors can make more sensible investments pertaining to their knowledge of the political and economic terrain and can take advantage of cheaper valuation in Q4’18.
Foreign transactions dropped by 68% from 2014 to 2016; but surged by 133% reaching N 1.208 trillion in 2017. While domestic transactions decreased by 62.4% from 2007 to 2017, reaching 1.33 trillion in 2017. But increased by 111% between 2016 to 2017.
Total MoM transactions at the exchange dropped by 41% from may’18 to June’18. Cumulative transactions increased by 70% from H1’2017 to H1’2018.
It has been recorded that foreign investment outweighed the domestic investment in the bourse by 9% in June’18.
While the foreign inflows dipped by 22.7% MoM from May’18 to June’18; the foreign outflows also majorly declined by 58.4% MoM during the same period.
Reporting for EasyKobo on Thursday, 26 July 2018 in Lagos, Nigeria
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