After underperforming its global peers in 2019, the nation’s bourse started the year on a good note early this year ranking it among the best performing.
The resurgence was buoyed largely by retail and few institutional investors who were forced to take new bride in the equities market after been forced out of the high-yielding Open Market Operations OMO by the CBN.
According to the NSE’s domestic and foreign portfolio investment report for January, as at 31 January 2020, total transactions at the nation’s bourse increased by 84.03percent from N127.94 billion in December 2019 to N235.46 billion in January 2020.
The performance in January 2020 when compared to the performance in January 2019 revealed that total transactions increased by 92.87percent.
With maturing OMOs hitting the system, January saw a surge in volume of the funds chasing existing investment vehicles with some of the liquidity flowing into the equities market just ahead of annual results announcements, it also saw some profit taking as investors locked in gains after the surge.
At an average interest rate of 12.19 percent, the central bank’s liquidity management tool, Open Market Operation (OMO), remains the only instrument offering positive real return.
These high-yeiding OMO Bills are, however, not accessible to non-bank corporate or individual investors but only foreign investors and local banks.
In January 2020, the total value of transactions executed by Domestic investors outperformed transactions executed by Foreign investors by approximately 40percent
A further analysis of the total transactions executed between the current and prior month (December 2019) revealed that total domestic transactions increased by 154.86% from N64.80 billion in December to N165.14 billion in January 2020.
Similarly, total foreign transactions increased by 11.35percent from N63.14 billion (about $206million) to N70.32 billion (about $229.42 million) between December and January 2020.
The value of domestic transactions executed by Institutional investors outperformed Retail investors by 2percent.
A comparison of domestic transactions in the current and prior month (December 2019) revealed that retail transactions increased by 233.75percent from N24.47 billion in December 2019 to N81.67billion in January 2020.
Similarly, the institutional composition of the domestic market increased by 107.02percent from N40.32 billion in December 2019 to N83.47 billion in January 2020.
Trend over a thirteen year period shows that domestic transactions decreased by 72.30percent from N3.556t in 2007 to N985bn in 2019 whilst foreign transactions increased by 53.08percent from N616bn to N943bn over the same period.
Total domestic transactions accounted for about 51percent of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49percent of the total transactions in the same period.
