by James, Michael Igiri
Investor’s apathy for investment in the stock exchange market has continued to rise as both foreign
and domestic investors’ participation on the Nigeria Stock Exchange, NSE, took a downward turn in
the month ended February 28, 2017.
Data polled by the NSE showed that total foreign investors’ transaction on the NSE slowed by
21.52% to 34.5 billion Naira from 44.01 billion Naira during this period.
According to reports, domestic transactions decreased by 22.88% from 51.31 billion
naira recorded in January 2017 to 39.57 billion naira in February 2017. Foreign investment inflow
declined to 16.10 billion naira from 22.61 billion naira, representing 28.79% decrease, while total
foreign investment outflow decreased by 13.88% to 18.44 billion naira compared to 21.40 billion
naira outflow in the previous month in January 31, 2017.
Further analysis showed that the institutional composition of the domestic market decreased by
21.93% from 31.19 billion naira recorded in January to 24.35 billion naira in February 2017. The
retail composition also decreased by 24.35% from 20.12 billion naira to 15.22 billion naira within the
same period. This, according to the NSE, indicates more active participation by institutional investors
over their retail counterparts in the period under review.
Bearing his mind on some of these economic fundamentals, Managing Director/CEO Cowry Asset
Management Limited, Mr Johnson Chukwu, said the major constraint to investment in the country
remained lack of confidence exacerbated by disparity in foreign exchange market. He explained that
nothing has changed about the country’s economic fundamentals to encourage foreign investors to
“Foreign investors do not have so much confidence; there is lack of confidence on the Nigerian
economy as a whole by foreign direct, and portfolio investors. That is also not helped by the current
disparity in foreign exchange prices between official rate, interbank rate and the parallel market.
Added to the fact that access to liquidity in the FX market is such that investors are not assured that
they can just convert their naira asset back to dollar whenever they want, so market liquidity in FX
market is another constraining factor,” he said.
Meanwhile, the rally witnessed the previous week in the equities market was halted as investors lost
71.1 billion naira from their investment during the week. The market capitalisation, which started the
week at 8.878 trillion naira, fell by 0.80% to close at 8.807 trillion naira. The All Share Index, ASI,
ended the week with a 0.2% decline on Friday, bringing week-on- week performance to 0.77%.
In their reaction to events in the stock exchange during the week, analysts at Afrinvest said: “As the
earnings season wind down, we believe market performance will be majorly driven by developments
in the macroeconomic space. Yet, following four consecutive days of decline, we expect bargain
hunters to show interest in some fundamentally sound stocks in the week ahead.”
Also, analysts at Cowry Asset Management noted that a mix of bargain hunting and profit taking
activities would mark activities in the market this week.
Source: Vanguard Newspaper