29 March 2015, Lagos – Domestic investments in the Nigerian Stock Exchange have recorded a substantial decline due to fears and uncertainties regarding the 2015 general elections, as well as concerns about insecurity.
The latest investment details from the NSE showed that local investments dropped by N40.1bn at the end of February 2015.
As of January this year, the total investments by domestic investors stood at N90.61bn.
The document obtained from the NSE on Friday, however, indicated this amount dropped by N40.1bn or 44 per cent to N50.24bn as of the end of last month.
On the other hand, statistics showed that foreign investments rose in the period under review, as a total of N133.95bn was invested by foreigners in February 2015.
This represented an increase by N34.84bn or 35 per cent compared to N99.11bn invested at the end of January.
The NSE document said, “Domestic investors conceded about 45.22 per cent of trading to foreign investors as domestic transactions decreased from 47.76 per cent to 27.39 per cent while FPI transactions increased from 52.24 per cent to 72.61 per cent over the same period.
“The report highlights the domestic composition of transactions on the Exchange between January and February, 2015. It illustrates that total domestic transactions decreased by 44.22 per cent from January to February 2015.
“The institutional composition of the domestic market which was about 33.69 per cent at the end of January increased to 53.32 per cent at the end of February, whilst the retail composition decreased from 66.31 per cent to 46.68 per cent in the same period.”
Some capital market experts, who spoke to our correspondent, attributed part of the reasons for the consistent reduction in local investments to fears of the general elections, the increasing security concerns and the tight monetary policies of the Central Bank of Nigeria.
The Managing Director and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said that factors leading to the decline in local investments were both external and internal, adding the trend was likely to continue until the second quarter of 2015.
He said, “The factors driving the bear run seem to be the declining oil prices; depleting reserves; termination of quantitative easing;likely further tightening of monetary liquidity by the central bank and a possible two-horse unpredictable presidential election in February 2015.
“These factors are most unlikely to reverse soon, and so, the earliest time one should expect a rebound is the second quarter of 2015, subject to the outcome of the general elections.”
The Head, Research and Investment, BGL Plc, Mr. Femi Ademola, also said that he did not expect the situation to change soon.
He said, “Last year, a lot of retail people came to the market because of what they saw in 2012 and 2013. In one of those years, a major company returned more than 1,000 per cent, which was a good attraction. Unfortunately for them, they have made losses again and may want to run away once more.”