June 2021 Domestic and FPI Report: Activity Level Rebounds as Retail Investors Spur Performance


Tuesday, August 03, 2021 / 02:36 PM / By CSL Research / Header Image Credit:  CSL

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In the recently released NGX Domestic & Foreign Portfolio Investment Report for June, total value traded grew 3.7% m/m to N100.8bn (US$244.9m) in June from N97.2bn (US$236.3m) in May 2021. Activity level among domestic investors grew 0.6%m/m to N77.4bn (US$188.0m) in June 2021 supported by transactions from retail investors, up 9.5%m/m to N36.1bn (US$87.6m) while transactions from institutional investors dipped 6.1%m/m to N41.3bn (US$100.3m). On the other hand, foreign investor participation in the local bourse increased, up 15.4%m/m to N23.4bn (US$56.9m) from N20.3bn (US$49.3m).


Nevertheless, domestic investors maintained dominance of the local bourse as their share of total transactions in June was 76.8% (YTD; 78.5%) while that of foreign investors was 23.2% (YTD; 21.5%).


On the domestic front, despite the lull in performance by the institutional investors, they still dominated activities, with transactions worth N41.3bn (US$100.3m) while retail investors executed transactions worth N36.1bn (US$87.6m). Notably, foreign inflows grew to N13.9bn (US$33.8m) in June 2021 compared with foreign outflows of N9.5bn (US$23.1m) in the same period, resulting in a net inflow of N4.4bn (US$10.7m) vs net inflow of N5.7bn (US$13.9m) in May 2021. The higher outflows relative to inflows may indicate that foreign investors have been able to move some of their funds out of the market.

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Looking ahead, we expect no significant change in the direction of the equities market owing to several factors. Firstly, domestic investors who currently dominate the market are highly risk averse finding risk free naira assets more attractive, thus limiting increased flows to the local bourse. Also, the FX constraints has sustained foreign investors' apathy towards the Nigerian market despite the cheap valuations. However, in the near term, the release of favourable earnings from the sector bellwethers and payments of interim dividends are likely to propel buying activities but the impact will likely be short lived.


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