23January 2016, Lagos – The stake of indigenous investors in the Nigerian Stock Exchange dropped by N256.07bn over the last 12 months, according to recent data released by the Exchange.
The NSE’s total domestic transactions was said to have decreased by 22.53 per cent from N1.13663tn recorded at the end of 2014 to N880.56bn recorded at the end of 2015.
The declining trend prevailed up to mid-January with equity investors in the country’s capital market losing N804tn of their investment worth in the first seven trading days of the month.
Total transactions at the nation’s bourse decreased by 41.72 per cent from N189.72bn recorded in January 2015 to N110.56bn in December 2015. This represents a decrease of 13.49 per cent from the N127.8bn recorded in November.
The total domestic transactions were said to have increased by 7.26 per cent from N55.2bn in November to N59.21bn in December 2015. In comparison to December 2014, the total domestic transactions decreased from N133.6bn to N59.21bn.
The institutional composition of the domestic market, which was about 47.17 per cent in November, increased to 67.86 per cent at the end of December, while the retail composition decreased from 52.83 per cent to 32.14 per cent in the same period.
In comparison to December 2014, institutional composition decreased from 72.99 per cent to 67.86 per cent, while the retail composition increased from 27.01 per cent to 32.14 per cent in the same period
According to the NSE, total foreign transactions on the Exchange had decreased by 33.39 per cent between 2014 end and 2015 end. The value fell from N1.53892tn to N1.02507tn in the period.
There was a significant shift in Foreign Portfolio Investment, which outperformed domestic between 2011 and 2012, the NSE explained.
The bourse stated, “In 2013, there was a major rebound in the domestic component, which led to an almost equal split in foreign versus domestic transactions. This dropped in 2014 where FPI outperformed domestic transactions.
“In 2015, the FPI dropped compared to 2014. However, it slightly outperformed domestic transactions in the same period.”
However, the market had in three straight days, resisted the falling trend. The market, which rebounded on Wednesday, also appreciated by N48.09bn in market capitalisation to close at N8.194tn from N8.146tn recorded on Thursday.
The dramatic recovery of the NSE was attributed to activities of bargain hunters taking positions on the oversold market.
“Attractive valuations from well-beaten stocks seem to have driven up the equity play by investors…value stocks are getting more attractive with prices at historically low levels,” said United Capital in its research note.
The NSE All-Share Index had fallen to its lowest point since July 2012 on Monday, January 18, 2016, down 4.1 per cent with fund managers jittery over the Central Bank of Nigeria’s inability to provide dollars for investors exiting the market.
The ASI, which has the second-biggest weighting after Kuwait on the Morgan Stanley Capital International frontier market index, fell for nine straight days, sliding below the important 23,000-point line to a level last seen on July 12, 2012.
The NSE ASI dropped from 23,514.04 basis points to close at 22,550.83 basis points on that day, while the market capitalisation crashed to N7.755tn from N8.086tn.
When the bourse’s main indicator closed, it cumulated in year-to-date losses of 17.9 per cent.
On Friday last week, the CBN’s financial markets director, Mr. Emmanual Ukeje, had told Reuters that foreign exchange auctions would no longer be held daily. Four days earlier, the monetary authority had halted dollar sales to retail currency outlets.
“We don’t sell (dollars) on a daily basis any more. When we do the auction, everybody bids,” he stressed.
“Oil prices are expected to tank in coming weeks (and) heighten the supply glut in the market. That, coupled with the CBN capital control measures, will keep foreign portfolio investors sitting on the sidelines or dumping Nigerian equities,” United Capital said in a research note on Monday.
It told clients that corporate performance expectations for the 2015 financial year remained feeble and did not provide a basis for a market rebound.
The stock exchange has put a circuit breaker in place to halt trading if the main stock index drops by five per cent.