Nigeria Stock Exchange

Following sell pressure in the Nigerian stock market arising from growing political tension and security challenges in the country, foreign investors pulled out about N43. 78 billion from the local bourse last September.

According to data obtained from the Nigerian Stock Exchange (NSE), foreign investment outflows increased by 27.60 per cent from N34.31 billion to N43.78 billion in September 2018.

There was also a significant decrease of 27.03 per cent in total domestic transactions from N62.87 billion in August 2018 to N45.87 billion in September 2018.

Total deals at the nation’s bourse reduced by 2.79 per cent from N133.84 billion recorded in August 2018 to N130.20 billion (about $425.6 million) in September 2018 .

The cumulative transactions from January to September increased by 21.23 per cent from N1.655 trillion recorded in 2017 to N2.007 trillion in 2018.

Highlights of the domestic composition of transactions on the Exchange between January and August 2018, showed that the institutional composition of the domestic market increased by 14.33 per cent from N22.67 billion in August to N25.93 billion in September 2018, whilst the retail composition reduced by 50.38 per cent from N40.19 billion to N19.94 billion within the same period.

This indicates a higher participation by the institutional investors’ over their retail counterparts in September 2018.

The Securities and Exchange Commission (SEC) recently said that the major contributory factor to the current downward trend of the market is the outflow of foreign investment.

Acting Director General of the Securities and Exchange Commission, SEC, Ms. Mary Uduk, who spoke while responding to questions from journalists on the sidelines of the just concluded World Bank/IMF Annual Meetings in Bali, Indonesia, said the outflow has led to sell pressure accumulating into depressed prices.

This she said, is one of the reasons why the Commission is mapping out strategies to build confidence in the market and encourage more retail investors.

Uduk assured investors in the Capital Market that there is nothing to fear on the performance of the market as the 2019 election approaches.

She said the upcoming election might have made some investors to hold back their investments and sell or adopt a wait and see strategy until after the elections, but added that it is nothing to worry about.

“We understand the importance and transparency,’ she said. “However it is also important for us to develop local investors by building their confidence and encouraging the participation of foreign investors for market efficiency and liquidity.

“We have made a lot of progress in that direction like risk-based supervision, zero tolerance to infractions in the market, complaint Management Framework among others. If you don’t tolerate infractions, investors will know that somebody is watching their back. We have other initiatives like e-dividend, Direct Cash Settlement, which are all geared towards encouraging investors in the Nigerian capital market”.

Uduk said the SEC is exploring avenues to deepen the market, through the introduction of different products such as derivatives, non-interest capital market products and commodities and finalising rules on derivatives as well as have a standing Committee in developing a vibrant Commodity Ecosystem.

The founder, Independent Shareholders Association of Nigeria, Sir Sunny Nwosu, said the economic policies of the country were responsible for the exit of foreign investors.

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