NSE recorded 2.657tn transaction in 2014

Investors in the equities segment of the Nigerian Stock Exchange carried out transactions worth N2.657tn last year, the equity trading data released by the Exchange showed.

A breakdown of the figure showed that foreign portfolio investors accounted for 57.52 per cent or N1.538tn of the total transactions, while domestic investors accounted for the balance of N1.136tn.

Although 2014 was a bad year for the Exchange in terms of returns as the NSE All-share Index closed the year with a 16.14 per cent negative return, the total equity transactions increased by 30.4 per cent or N624bn during the period.

In 2013, the total equity transactions stood at N2.051tn, with foreign portfolio investors accounting for N1.042tn (50.80 per cent) and domestic investors accounting for the remaining N1.009tn.

Some analysts had expected domestic investors to dominate transactions in 2014. However, despite the exit of many foreign investors due to economic, political and security concerns, foreign portfolio investors have continued to dominate transactions.

Analysts, however, lamented the situation, insisting that the market would remain volatile as long as it was dominated by foreign portfolio investors who could exit the market suddenly.

Last week, at a one-day dialogue on ‘The capital market and 2015 federal budget’, which was organised by the Chartered Institute of Stockbrokers, Association of Stockbroking Houses of Nigeria and the Association of Issuing Houses of Nigeria, stakeholders emphasised the importance of a market driven by domestic investors.

They explained that for the capital market as a whole to effectively play its expected role in driving the economy of the nation, there was an urgent need to increase local institutional and retail investment in it.

The Chairman, NASD OTC, Mr. Olutola Mobolurin, had said, “We must generate savings within the country to supplement the foreign investment. We cannot depend on foreign investment if we want to salvage this country.

“We need to expand local institutional investment capacity; and to achieve this, Pension Fund Administrators must play a larger role.”

The Head, Research and Investment, BGL Plc, Mr. Femi Ademola, does not expect the situation to change soon, however.

He said, “The reason why the retail investors stayed away from the market in recent times was because of the fact that they burnt their fingers earlier on in 2007 when we had a crisis in the market. But in 2012 and 2013, there was a huge rally in the market and that was an attraction for a lot of other guys to come to the market.

“Last year, a lot of retail people came to the market because of what they saw in 2012 and 2013. In one of those years, Forte Oil returned more than 1,000 per cent, which was a good attraction. Unfortunately for them, they have made losses again and may want to run away once more.”

On his part, the Head, Investment Advisory, Afrinvest West Africa, Mr. Ayodeji Ebo, said, “What can drive domestic investment in the capital market is the quantum of growth experienced in the economy.

“Aside the domestic institutional investors, based on the slow growth being experienced in the economy, most domestic investors saved less and as a result of the relationship between savings and investment, they will reduce investment.”