Local and foreign investors on the Nigerian Exchange Limited (NGX) traded N485.4bn worth of equities between April and June 2022, representing a 40.11% growth when compared to N346.43bn recorded in the first three months of 2022, according to a statement by the exchange on Friday.
Data by the bourse showed that the growth in the value of equities traded also reflected in the volume, rising by 143.83% to 54.27bn in Q2, 2022 up from 22.26bn reported in Q1 2022. The number of deals during the period rose by 8.5% to 320,778 from 295,533 reported by the NGX for Q1 2022.
Consequently, the NGX All-Share Index appreciated by 10.3% to 51,817.59 basis points in Q2 2022 from 46,965.48 basis points in Q1 2022.
The equities market segment of the NGX in the period under review, the statement added, witnessed positive sentiment trading as investors’ participation in listed fundamental stocks, leading to the market capitalisation closing Q2 2022 at N27.94tr from N25.31tr it closed in Q1 2022.
The data further disclosed that value of Fixed Income traded also rose by 38.7% to N1.01tr in Q2 2022 from N728.9bn reported in Q1 2022.
According to the data by the NGX, volume of fixed income traded moved to 972,206.00 in Q2 2022 from 688,564 reported in Q1 2022; just as the market capitalisation of fixed income moved from N21.42tr in Q1 2021 to N22.23tr in Q2 2022.
The CEO, Wyoming Capital & Partners, Tajudeen Olayinka attributed the growth and positive performance to the improved liquidity in the system over the last six months.
Other factors driving liquidity in the equities market he added are, “instant payment of dividends to shareholders through electronic means (e-dividend), provides opportunities for immediate reinvestment of these dividends, especially by institutional investors, who manage funds and portfolios for clients. This did not leave out other traditional investors, who took advantage of low prices, in the run-up to financial year-end rallies that we saw at the beginning of year 2022.
“Negative real return in the fixed income market and the need to hedge against inflation. Equity market is an inflation adjusting market, and so, some investors who were willing to hedge against inflation, irrespective of the downside risk that the market poses, decided to bring liquidity back to equity market.
“The ongoing crash in the crypto market brought liquidity back to equity market. It has been said that more Nigerian investors participate actively in the crypto space, and so, the sudden, though long expected crash in that market, made some affected Nigerian investors cut their losses, for less volatile and recoverable opportunities in the equity market.
“Availability of derivative products is encouraging more institutional investors to embrace equity market. Investors can now short or long the market at ease. All these activities provide liquidity to the market,” he added.