The Nigerian Exchange Limited (NGX) has reported that total domestic and foreign portfolio transactions in Nigeria’s equity market amounted to N346.23 billion in April 2024. This information was disclosed in a statement released by the NGX.
Month-over-Month Comparison
As of April 30, 2024, total transactions at the nation’s bourse decreased by 35.71% from N538.54 billion (approximately $404.69 million) in March 2024 to N346.23 billion (approximately $260.24 million) in April 2024. The decline may be attributed to prevailing low investor sentiment, with market participants exhibiting cautious behavior amid persistent volatility in the Nigerian market.
Impact of CBN Policy Announcements
The NGX All-Share Index experienced a significant decline in April, losing N3.57 trillion in market value following policy announcements from the Central Bank of Nigeria (CBN) that tended to favor fixed-income securities.
Breakdown of Domestic and Foreign Transactions
A closer analysis of the transactions between April and March 2024 reveals that total domestic transactions decreased by 49.27%, from N444.28 billion in March to N225.40 billion in April 2024. Conversely, total foreign transactions increased by 28.19%, rising from N94.26 billion (approximately $70.83 million) to N120.83 billion (approximately $90.83 million) during the same period.
Institutional vs. Retail Investors
According to the NGX, institutional investors outperformed retail investors by 10%. A comparison of domestic transactions revealed that retail transactions decreased by 54.89% from N223.37 billion in March to N100.77 billion in April 2024. Similarly, institutional transactions decreased by 43.58% from N220.91 billion in March 2024 to N124.63 billion in April 2024.
Long-term Performance
Over a 16-year period, domestic transactions decreased by 10.94%, from N3.556 trillion in 2007 to N3.167 trillion in 2023. Meanwhile, foreign transactions fell by 33.28%, from N616 billion to N411 billion over the same period. In 2023, domestic transactions accounted for about 89% of total transactions, while foreign transactions accounted for only 11%.
Key Insights and Market Reactions
In April, the NGX All-Share Index experienced a substantial decline, resulting in a market value loss of N3.57 trillion. Several policy announcements from the Central Bank of Nigeria (CBN) significantly impacted the market:
- Recapitalization Plan: A new recapitalization plan for commercial banks aims to raise an estimated N4 trillion in fresh capital over the next two years.
- Interest Rate Hike: The CBN’s Monetary Policy Committee (MPC) decision to increase the benchmark interest rate by 200 basis points, from 22.75% to 24.75%, led to intensified sell-offs.
These factors contributed to a 6% decline in the local bourse, with the benchmark index closing at 98,225.63 points. The NGX All-Share Index fell below the 100,000-point threshold, closing at 98,225.63 points, a stark contrast to its peak of 104,562.06 points at the end of March 2024.