Nigeria’s Stock Market Witnesses Remarkable Surge in Foreign Transactions, Defying Economic Challenges

The Nigerian stock market, known as the Nigerian Exchange Limited (NGX), has experienced a surprising upswing in foreign investor interest during the first six months of 2023.

Despite grappling with soaring inflation, prolonged FX scarcity, and uncertainties surrounding the 2023 elections, total foreign transactions surged to an impressive N145.08 billion.

This surge in foreign investments is a ray of hope for the country’s equity trading as indicated by the recently released domestic and foreign portfolio investment reports for June 2023.

The earlier part of 2023 was marked by economic challenges, including high inflation rates and a scarcity of foreign exchange. However, changes made by the new administration in subsequent months witnessed a remarkable increase, more than doubling the total foreign transactions by mid-year.

In June 2023, total transactions at the bourse grew by  25.96% to N406.75 billion (approximately $537.87 million). This upswing is a stark contrast to the N156.52 billion recorded in June 2022, marking a staggering 159.87% increase in total transactions.

The report indicated that while total domestic transactions amounted to N1.306 trillion or 90%, foreign transactions’ value was N145.08 billion at the end of the review period.

Nevertheless, the surge in foreign investments shows a renewed interest in Nigeria’s equities market from global investors.

Institutional investors outperformed retail investors by 32% in the Nigerian stock market. The data from June 2023 revealed that retail transactions experienced a healthy increase of 40.70% from N88.50 billion in May to N124.52 billion.

Similarly, institutional transactions rose by 19.89% from N197.26 billion to N236.49 billion over the same period.

Over a period of 16 years, domestic transactions decreased by 45.30% from N3.556 trillion in 2007 to N1.945 trillion in 2022, while foreign transactions experienced a decline of 38.47%, from N616 billion to N379 billion over the same period.

The dominance of domestic transactions, accounting for approximately 84% of total transactions in 2022, indicates the importance of local investors in the market.