The cumulative transactions carried out in the local bourse from January to February fell by 15.86 per cent, from N201.37 billion recorded in 2016 to N169.43 billion in 2017. Documents obtained by New Telegraph showed that total transactions at the NSE also decreased by 22.25 per cent from N95.32 billion recorded in January 2017 to N74.11 billion (about $0.24 billion) in February 2017.
Further analysis of the transactions showed that last February, domestic investors outperformed their foreign counterparts by 6.78 per cent.
Domestic transactions decreased by 22.88 per cent from N51.31 billion recorded last January to N39.57 billion in February, whilst foreign transactions were also down by 21.52 per cent from N44.01 billion to N34.54 billion within the same period. Similarly, there was a 28.79 per cent decrease in foreign inflows from N22.61 billion in January to N16.10 billion in February. Foreign outflows also fell by 13.83 per cent from N21.40 billion last January to N18.44 billion in February.
Highlights of the domestic composition of transactions on the Exchange between January and February revealed that the institutional composition of the domestic market decreased by 21.93 per cent from N31.19 billion recorded in January to N24.35 billion. The retail composition also decreased by 24.35 per cent from N20.12 billion to N15.22 billion within the same period. This indicates more active participation by institutional investors over their retail counterparts in the period under review.
Further checks revealed that since 2011, foreign transactions have consistently outperformed domestic deals. However, domestic transactions slightly outperformed foreign deals in 2016, accounting for 55 per cent of the total transaction volume in 2016.
Also, foreign desks have further declined by 66.34 per cent from N1,539 billion in 2014 to N518 billion in 2016, representing circa 45 per cent of total transactions in 2016. Over the nine year period, domestic transactions have significantly decreased by 85.43 per cent from N3,556 billion in 2007 to N634 billion in 2016.
The Chief Executive Officer, NSE, Mr. Oscar Onyema, who spoke at 2016 Market Recap and Outlook for 2017, said capital markets tend to act as barometers of any economy.
And in Nigeria’s case, the prolonged economic downturn directly impacted an array of products and asset classes on the NSE. Onyema said inflation had a converse-effect on activity in the fixed income market during the year, adding that it spiked above 18 per cent by Q4’16, driven by rising prices of imports and structural deficiencies in power, transportation, and production.
He said: “The high rate of inflation forced the CBN (Central Bank of Nigeria) to raise interest rates to 14 per cent in July 2016. Consequently, the value of bonds in the market depreciated, increasing investors’ appetite for portfolio diversification via interest rate products selling at discounts.
This resulted in a 137 per cent increase in the value of bonds traded on the NSE in 2016, admittedly from a low base. We also saw a 31.17 per cent improvement in bond issuance during the year.”
The NSE boss said that after peaking at 31,071.25 in June 2016, an increase of 8.48 per cent over the 2015 closing value, the NSE All Share Index began to retreat to negative territory as total foreign inflow dropped 45 per cent between June (N42.46 billion) and July (N23.43 billion) due to loss of confidence in the implementation of an announced free floating FX regime; weak corporate performance; and 2nd consecutive quarter of negative economic growth in the period resulting in the economy entering into a recession.