Perhaps boosted by the increased purchase of shares by core investors in various companies in recent months on the Nigerian Stock Exchange (NSE), the percentage contribution of domestic investors to the total fell from 68.62% in July to 58.73% in August; while foreign investors rose to 41.27%, from 33.51%.
In real terms, trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows, showed that foreign investors accounted for N38.98bn from N34.59bn; while domestic investors pooled N55.47bn, down from N68.62bn in July 2020.
Consequently, total transaction value for the month fell by 8.49% from N103.21bn in July to N94.45bn. When compared to the N121.99bn in the corresponding period of 2019, showed that total transactions decreased by 22.58%.
Domestic transactions in the current and prior month (July 2020) revealed that retail transactions decreased by 18.22% from N32.54bn in July 2020 to N26.61bn in August 2020.
As reported by Investdata News, Gbadebo Olatokunbo, a shareholder activist listed core investors engaged in the act as Heineken B.V (Nigerian Breweries), Unilever Overseas (Unilever Nigeria), Nestle, and Commantoros of Flour Mills, among others.
These major shareholders, he continued, “got their dividends for 2019 financial year, and because of the foreign exchange problem in the country, owing to the fact that the Central Bank of Nigeria (CBN) stopped the sale of forex since March, the core investors have been unable to repatriate their dividends from the country.
“They can’t put it in the bank to wait for US Dollars when interest rate is near zero and inflation is 12.83%, asides the fact that as corporate, they can’t go into black market to buy currency at N480/$.
“So, the most prudent thing to do with that money is reason for their resort to this stock buy-back, moreso if they see the current valuations as attractive, given the depressed market,” he stressed further.
Meanwhile, data by the NSE on Thursday, showed that the total transaction value for August is the lowest year-to-date, while the peak was in March, the same month that the economic lockdown was effected in the final week, when transaction value rose to N242.91bn, with foreign investors accounting for 45.37%, while domestic investors pooled 54.63%. This was followed by N235.46bn in January with foreign investors contributing a paltry 29.86%; followed by the N128.88bn crossed by stockbrokers in June; and N128.67bn in April.
Consequently, total transaction value for the first seven months of 2020 amounted to N1.201tr, down by N121.79bn or 9.21%, from N1.323tr in the corresponding period of last year.
Of this amount, foreign investors contributed N470.2bn or 39.14%, from N495.46n or 44.93%; while domestic investors accounted for N731.02bn or 60.86% as against the N728.51bn or 55.06% recorded between January and August 2019.
