Lagos, Nigeria - The Nigerian Exchange Limited (NGX) has reported a significant increase in total transactions between April 2020 and April 2024, with the value rising from N128.67 billion to N1.894 trillion.
Domestic investors have played a crucial role in this growth, with their transactions increasing from N75.49 billion to N1.560 trillion during the same period.
Foreign investors have also shown increased interest, with their investments growing from N53.18 billion to N334.01 billion.
This increase in foreign investment is seen as a positive development, reflecting a renewed interest in Nigerian stocks following key policy reforms by the new administration.
The NGX's Domestic & Foreign Portfolio Investment (FPI) Report, which is widely regarded as a credible measure of foreign investor sentiment, indicates a significant increase in foreign inflow, reaching N114.97 billion, while foreign outflow amounted to N165.86 billion.
Despite the positive trend, foreign investor participation in the Nigerian stock market remains subdued due to macroeconomic challenges, including foreign exchange (FX) scarcity and global uncertainties.
Capital market analysts note that domestic investors are now the driving force behind the market, a shift that is seen as positive for the market's credibility and stability.
The surge in domestic investor interest is a welcome development, as it helps to mitigate the impact of global economic downturns that often lead to capital flight.
However, experts emphasize the need for the Nigerian government to address macroeconomic concerns and promote issues of national development to attract foreign investors and ensure long-term market stability.
The banking recapitalization exercise is expected to bring more activities to the primary market, which is crucial for capital formation and economic growth.
However, the primary market for equities has been comatose since 2015, highlighting the need for more robust macroeconomic fundamentals to support the market.
In conclusion, while the Nigerian stock market has witnessed a significant increase in total transactions, driven largely by domestic investors, there is a need for continued efforts to address macroeconomic challenges and attract foreign investors to ensure long-term market stability and growth.
