10 July 2018 ( Lagos ) :The Nigerian stock market’s most ignored and maligned customer base is the domestic retail investor.  This largely ignored customer base determines how the stock market in Nigeria will perform.  In January 2018, domestic retail investors put N 106.5B in the Nigerian stock market and the stock market rose approximately 16%.  

The contribution of domestic retail investors has not even reached half of that figure per month from February to June 2018 and the Nigerian stock market is now in negative territory at approximately 1.6%.  

Total foreign portfolio investment from January - May 2018 rose by 121% compared to the same period in 2017.  Domestic institutional investment only rose by 58% over the first five months of 2018 relative to the same period in 2017.  If domestic investors do not believe in the viability of their own stock market buoyed by the non-exposure to currency risk, foreign portfolio investors will continue to trade stocks rather than invest in stocks. 

Domestic institutional investors need to increase their stake in the Nigerian equity market if  market stability is to be a sustained reality.  Domestic retail investors need to be encouraged to invest more funds more frequently and consistently, if all investors are to experience gains from a sustained market rally.  

The Nigerian ASI peaked in March 2008 driven by an all-time high number of domestic retail investors in the Nigerian stock market that started in early 2007.  The stock market ended up down by 45.8% in 2008 driven by foreign portfolio investors fleeing.   

The Resource Curse is afflicting Nigeria to a large extent.  The Foreign Complex Curse is afflicting the Nigerian stock market courtesy of the brokerage firms.  More attention and resources continue to be devoted to the foreign investor that is not able to generate a sustained upward rally in the stock market but is continually sought out for this purpose.  It is time to look inward; the road to significant financial gains lies with the domestic retail investor.  This is a fact; not feelings.    

Written by : Jude Fejokwu

Above article written by Jude Fejokwu and was sent to easykobo via email. 

Reporting for EasyKobo on Tuesday, 10 July 2018 in Lagos, Nigeria