Local investors dominate as equities market soars by 1.97% in October

The Nigerian equities market experienced a 1.97% rise in trading activity in October 2024, reaching an impressive total of N502.73 billion, driven largely by the dominance of domestic investors.

This growth, reported by the Nigerian Exchange Limited (NGX), reflects a steady month-on-month (MoM) increase from N493.01 billion in September and a remarkable 127.54 per cent year-on-year (YoY) growth compared to October 2023, when the market recorded N220.94 billion.

Domestic investors accounted for 90.56 per cent (N466.27 billion) of the total market participation, significantly overshadowing foreign investors, who contributed just 9.44 per cent (N47.46 billion).

This highlights an 859.27 per ent dominance of local participation over foreign involvement.

The domestic market showed a modest 0.81 per cent MoM increase from N451.60 billion in September, and a robust 142.71 per cent YoY growth from N187.58 billion in October 2023.

Within the domestic segment, institutional investors led the charge, contributing 67.74 per cent ( N285.23 billion), while retail investors accounted for N170.04 billion.

Despite the overall growth, retail participation experienced a significant 40.98 per cent decline MoM, dropping from N288.10 billion in September.

Conversely, institutional investments surged by an impressive 74.45 per cent, climbing from N163.50 billion in the previous month.

Foreign investor participation saw a 14.61 per cent MoM increase, rising from N41.41 billion in September to N47.46 billion in October. Year-on-year, foreign transactions grew by 42.27 per cent, up from N33.36 billion in October 2023.

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Notably, October recorded the highest net foreign inflows of 2024 at N19.16 billion, driven by N33.31 billion in inflows and N14.15 billion in outflows.

However, for the first 10 months of 2024, foreign investments showed a net outflow trend, with outflows exceeding inflows by 13.93% (₦55.74 billion).

The data reflects a growing reliance on domestic institutional investors, underpinned by confidence in Nigeria’s recent economic reforms and policy stability.

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“The rise in institutional investment is a positive signal for the market’s resilience,” said Dr. Chinedu Nwosu, a capital markets analyst.

“However, the cautious approach by foreign investors underscores the need for deeper structural reforms to attract sustainable foreign capital.”

Meanwhile, Mrs. Adesola Adebayo, an investment strategist, expressed concern over the decline in retail participation, attributing it to economic pressures.

“Retail investors are vital for liquidity, and their reduced activity suggests that disposable income and confidence are being squeezed by inflationary pressures,” she explained.

Experts predict the dominance of domestic investors will continue, driven by institutional players and gradual recovery in retail activity. However, foreign participation may remain subdued until global macroeconomic stability improves.

“The challenge lies in crafting policies that enhance the market’s attractiveness while ensuring long-term sustainability and growth,” remarked Dr. Nwosu.