The total transactions on the Nigerian Stock Exchange surged to N2.35 trillion by the end of May 2024, representing a 115.40% increase compared to the first five months of 2023.

This was disclosed in the domestic and foreign portfolio participation in the equity trading report released by the Nigerian Exchange Limited (NGX) on Thursday.

According to the report, domestic investors maintained their dominance in the market, accounting for N1.79 trillion (79.63%) of the total transactions in the five-month period.

In contrast, foreign investors contributed N458.29 billion (20.37%) to the market.

A further breakdown of the data revealed that domestic institutional investors led the charge with N906 billion in transactions, slightly ahead of domestic retail investors, who recorded N885.19 billion.

The growth in equity trading has been attributed to several critical reforms initiated in the past year.

Since May 2023, Nigeria has undergone a significant leadership change, leading to the implementation of key policies such as foreign exchange market harmonization and the removal of fuel subsidies.

Experts believe these reforms have boosted the capital market and encouraged foreign investors to reconsider their positions in Nigeria.

Also, the Monetary Policy Rate (MPR) has been hiked multiple times, reaching 26.25% at the May 2024 Monetary Policy Committee meeting.

This tightening monetary policy has also influenced the market dynamics, contributing to increased trading activities.

A recent report by PricewaterhouseCoopers (PwC), titled “Navigating Economic Reforms,” highlighted the impressive performance of the Nigerian Stock Exchange.

The report noted an 85.2% increase in market capitalization, from N30.3 trillion in May 2023 to N56.5 trillion in May 2024.

This growth was driven by positive sectoral index performances, particularly in the oil and gas (124%), consumer goods (104%), insurance (88%), and banking (69%) sectors.

The Nigeria 10-Year Government Bond Yield also reached an all-time high of 19.30% in May 2024, up from 14.55% in May 2023.

This increase in bond yields is attributed to the attractive rates on Open Market Operations (OMO) and Treasury Bills, spurred by the rise in the MPR.

Month-on-month data from NGX showed that total transactions rose from N346.23 billion in April to N355.38 billion in May, reflecting a 2.64% increase.

Domestic investors played a pivotal role in driving this increased activity, with their participation rising by 2.53% from N225.40 billion in April 2024 to N231.10 billion in May 2024.

Within this period, institutional investors outperformed retail investors by a margin of two percent, recording N117.57 billion compared to N113.53 billion.

Meanwhile, total foreign transactions also saw an increase, rising by 2.86% from N120.83 billion in April to N124.28 billion in May 2024.

This uptick in foreign participation is a positive signal, indicating a gradual return of international investors to the Nigerian market.

The sustained growth in equity trading and the dominance of domestic investors underscore the resilience and potential of the Nigerian stock market.

With ongoing reforms and a more stable economic environment, the outlook for the local bourse remains positive, promising further growth and opportunities for both domestic and foreign investors.

Kenya’s sovereign dollar bonds experienced a sharp decline following President William Ruto’s decision to abandon a $2.3 billion fiscal plan aimed at balancing the budget and ensuring the nation’s debt sustainability.

This move came in response to widespread and violent anti-government protests that have rocked the country.

The nation’s 2031 debt security plummeted to its lowest price since its issuance in February, making Kenyan bonds one of the poorest performers among emerging and frontier markets since the demonstrations began on June 18.

The protests have resulted in at least 17 deaths and numerous injuries, reflecting the severe public dissatisfaction with the proposed fiscal measures.

Kenya, like many other developing nations, faces an urgent need to implement fiscal reforms to reduce elevated debt levels, control soaring interest costs, and secure funding from the International Monetary Fund (IMF).

However, the proposed measures met significant resistance from a populace already burdened by a cost-of-living crisis exacerbated by post-COVID inflation.

Lawmakers initially compromised on some of the most contentious proposals, such as a 16% tax on bread, but continued public pressure forced the complete abandonment of the plan.

In a televised address, President Ruto conceded to the demands of the protesters. “I concede,” he said. “I will not sign this Finance Bill, 2024. I run a government but I also lead people. And the people have spoken.”

The decision to scrap the fiscal plan leaves Kenya in a precarious financial position. The country’s budget deficit currently stands at 3.3%, with an interest burden consuming one-third of government revenue.

The failure to implement the fiscal reforms raises concerns about Kenya’s ability to stabilize its finances and meet its commitments under the economic plan agreed with the IMF in 2021, which includes reducing the budget deficit, boosting revenue collection, and curbing wasteful spending.

The financial markets reacted swiftly and negatively to the news. Since June 18, Kenya’s securities have handed investors a negative return of 1.3%, marking the most significant losses after Gabon and Egypt in a Bloomberg Index of developing-nation sovereign dollar bonds.

During the same period, the average return for emerging markets was a positive 0.3%.

The protests erupted following President Ruto’s push for new taxes on various sectors, including motor vehicles and mobile-money transfers, to help stabilize the state’s finances.

The rejection of these measures by the public underscores the significant opposition to the ambitious budget and the challenges Kenya faces in making its debt sustainable.

Simon Quijano-Evans, chief economist at Gemcorp Capital Management, highlighted the broader implications for sub-Saharan Africa, a region heavily impacted by global economic shifts such as Russia’s invasion of Ukraine.

“Combined with a very young and dynamic population facing economic challenges on all fronts, this is clearly a huge burden for African society, as seen in the reactions to Kenya’s finance bill,” he said.

Hasnain Malik, a strategist at Tellimer, noted growing concerns about Kenya’s long-term solvency.

“Although the nation’s short-term external liquidity issues had been mostly resolved, its latest fiscal performance has been disappointing,” Malik wrote in a note dated June 21. “This underscores the challenges Kenya faces in making its debt sustainable.”

With the fiscal plan scrapped, President Ruto has few viable options left to address the budget deficit and rising interest costs.

The protests, driven largely by young Kenyans who have previously been apolitical, signal a new level of public engagement and resistance to government policies that fail to address the immediate economic hardships faced by the populace.

Nvidia Corp. shares entered correction territory on Monday, the biggest three-day value loss for any company in history.

The AI-focused chipmaker experienced a 6.7% drop, its largest one-day percentage decrease since April.

This marks the third consecutive negative session for Nvidia, culminating in a total three-day loss of approximately $430 billion from its market capitalization.

The stock’s 13% decline over the period surpasses the 10% threshold that typically defines a correction.

This dramatic drop has not only affected Nvidia but also weighed heavily on the semiconductor sector, with the Philadelphia Stock Exchange Semiconductor Index falling 3% on Monday.

Other notable declines included Broadcom Inc. with a 4% drop, Qualcomm Inc. down 5.5%, and ARM Holdings Plc slipping by 5.8%.

US-listed shares of Taiwan Semiconductor Manufacturing Co. also shed 3.5%.

This significant market shift has reduced Nvidia’s valuation below the $3 trillion threshold, positioning it behind both Microsoft Corp. and Apple Inc. in terms of market size.

Nvidia briefly held the title of the world’s largest stock last week before this downturn.

“In the near-term, it is plausible that investors begin suffering from AI-fatigue or become more broadly concerned about index concentration,” said Neville Javeri, portfolio manager and head of the Empiric LT Equity team at Allspring Global Investments.

Despite the recent slump, Nvidia remains one of the top performers of the year, with shares up nearly 140% year-to-date, making it the second-best performer among S&P 500 Index components, just behind Super Micro Computer Inc., another favored AI stock.

Earlier in the year, Nvidia faced a similar drawdown of about 20% but quickly rebounded to achieve all-time highs. The current downturn, however, has amplified concerns about the company’s valuation.

Nvidia trades at 21 times its estimated sales over the next 12 months, making it the most expensive stock in the S&P 500 by this measure.

Nevertheless, it continues to be well-regarded on Wall Street, with nearly 90% of analysts tracked by Bloomberg recommending a buy and an average price target suggesting about a 12% upside from current levels.

“The momentum in Nvidia and AI stocks in general has been staggering,” said Charlie Ashley, portfolio manager at Catalyst Funds. “In terms of investing, I would not be a contrarian right now.”

Nvidia’s rapid ascent, driven by high demand for its AI processing chips, has been a double-edged sword, fueling both optimism and apprehension among investors.

The stock’s recent performance underscores the volatile nature of the tech market and the ongoing debate about the sustainability of its high valuations amidst economic uncertainties.