Sunday, April 14, 2024

Domestic investors hold sway as ASI rises by 12.7% to N295.79bn in September


The domestic and foreign portfolio report of the Nigerian Exchange for the month of September 2023, released last weekend revealed that total transactions in the local bourse resumed its uptrend, rising by 12.7 percent month-on-month (m/m) to N295.79 billion in the moth as against N262.56 billion in August.

Analysis of the report shows that domestic investors primarily drove the increase as domestic transactions contributed 88.1 percent of total transactions during the month under review and as well increased by 15.6 percent m/m to N260.55 billion from N225.40 billion in August.

Elsewhere, foreign transactions contributed 11.9 percent of gross transactions, and also declined for the third consecutive month, decreasing by 5.2 percent m/m to N35.24 billion from N37.16 billion in August as the government’s reform-induced momentum slowed, dampening foreign sentiments.

This is even as market analysts say they expect domestic investors to continue to dominate the domestic equities market over the short-to-medium term, as higher fixed-income yields may constrain buying activities.

Analysts from Cordros Securities Limited are of the view that reclassification of the Nigerian capital market will continue to hurt the NGX as foreign portfolio investors stay away for some time.

“Given the MSCI’s reclassification of the Nigeria indexes from Frontier Markets to Standalone Markets status, we believe the possible return of FPIs to the Nigerian market may take longer than previously envisaged, even if FX liquidity issues abate in the near term. This is because a sizable portion of investors currently tracking and holding naira risky assets do so (or did) due to Nigeria’s index classification as a Frontier Market,” it stated in its market review.

Meanwhile, investors displayed a sense of optimism in the market last week as strong corporate earnings reports for the third quarter resulted in a bullish performance.

The All-Share Index climbed 0.33 percent week-on-week, ultimately closing at 67,136.58 points as investors reacted positively to the impressive third-quarter corporate earnings, even as fixed income market yields saw an upward trajectory following the Central Bank of Nigeria’s Treasury Bills primary market auction.

This resulted in gains totaling N121.51 billion, contributing to an increase in the market capitalization by 0.33% to reach N36.88 trillion.

The year-to-date return for the market reached 30.99%, while mixed sentiments prevailed; the market’s broader upward trend remained intact despite ongoing volatility and shifts in the index.

Sectoral performance for the week was varied. Three out of five tracked sectors saw declines, largely due to profit-taking activities and selling sentiment.

Notably, the Insurance, Industrial, and Consumer Goods indexes declined by 1.12 percent, 0.15 percent, and 0.04 percent week-on-week, respectively.

However, the Oil & Gas and Banking indexes recorded gains, thanks to positive investor sentiment in various stocks, including CHAMS, JAPAULGOLD, JAIZBANK, SEPLAT, ACCESSCORP, and FBNH.

Trading activity revealed a mixed picture. While the weekly deal count decreased by 1.25 percent week-on-week to 28,933 deals, the average traded volume decreased by 3.36 percent, reaching 1.45 billion units.

On the contrary, the weekly average value witnessed a substantial increase of 41.98 percent week-on-week, amounting to N25.42 billion.

Key performers during the week included CHAMS, GEREGU, MULTIVERSE, UACN, and TANTALIZER, with their share prices posting remarkable gains despite the market’s volatility. In contrast, CHIPLC, SUNO SASUR, NSLTECH, MCNICHOLS, and PRESTIGE experienced declines in their share prices.

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