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Monday, October 26, 2020 / 04:18 PM / by CSL Research / Header Image Credit: Zee Business
In
the recently released NSE Domestic & Foreign Portfolio Investment Report
for September, total value traded surged in line with expectations as value
traded grew 42.9% m/m to N135.0bn (US$350.6m) in September 2020 from N94.5bn (US$245.5m) in
August 2020. Activity level among domestic investors grew 71.1% m/m to N94.9bn
(US$246.5m) while
foreign investor transactions grew 2.7% m/m to N40.1bn (US$104.2m). Domestic investors retained dominance of
trading activities on the local bourse as their share of total transactions in
September stood at 70.3% (YTD; 61.8%) while foreign investors' share of total
transactions was 29.7% (YTD; 38.2%).
On
the domestic front, transactions were dominated by institutional investors who
traded N59.2bn (US$153.8m) while
retail investors executed transactions worth N35.7bn (US$92.7m). We note that volume of transactions among
retail and institutional investors grew 34.1% and 105.2% respectively. Foreign
outflows increased to N26.1bn (US$67.8m) in September compared with N21.3bn (US$55.3m)
in August. Foreign inflows decreased to N14.0bn (US$36.4m) in September from N17.7bn (US$46.0m) in
August resulting in a net outflow of N12.1bn (US$31.4m) in September compared with a net outflow of
N3.7bn (US$9.6m) in August.
The
surge in activity level supported a strong bullish performance in the local
bourse in September. The benchmark All Share Index gained for the fifth consecutive
month, climbing higher by 6.0% in September. In September, OMO maturities of
N1.3tn hit the financial system which provided a number of local institutional
buyers with some liquidity to take positions in undervalued stocks which led
to price upticks across large cap stocks.
Going
forward, we expect local institutional investors to continue to dominate
activities in the domestic bourse. However, we note the robust liquidity driven
by huge OMO maturities would begin to subside in November as CBN's ban on
domestic non-bank investors from accessing the OMO window started in November
2019 which means local investors no longer expect OMO maturities after
November. That said, we think the local bourse's performance in the last
quarter would be largely dictated by the Q3 financial performance of bellwether
stocks.
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