Culled—Proshare

October 22, 2019/CSL Research

Nigerian Stock Exchange (NSE) data on domestic and foreign investor participation for September revealed that foreign investors’ inflows into Nigerian equities outpaced outflows for the second consecutive month this year. Foreign inflows were up 36.7% m/m to N47.7bn (US$131.9m) in September although outflows grew faster at 61.2% m/m to N46.7bn (US$129.2m). Consequently, net inflows were lower in September compared to August. Meanwhile, activity level in the stock market picked up in September as total value grew 16.0% m/m to N141.4bn with foreign investors having a greater share of 66.8% of the total value traded in September.

Investor participation on the local bourse over the past 2 months have signified some improved appetite for Nigerian assets. Coincidentally, the benchmark All Share Index (ASI) grew marginally in September, up 0.4%. From our observation, the improved sentiment in the bourse has not been broadbased but rather more stock and sector specific. Specifically, we noticed that buying interest in banking stocks like Access and UBA post the release of their H1 numbers as well as recovery in heavyweight oil & gas stocks erased broadbased losses in other bellwethers.

Despite improved foreign inflows over the last two months, we remain pessimistic on the sustainability of this trend as overall investor sentiment remains weighed down by underlying macroeconomic weakness and continued delay in the implementation of structural reforms to accelerate economic growth. Indeed, sentiment in the month of October has been weak with the bourse setting a new low in yesterday’s session. That said, in the short term, we expect the performance of the local bourse to be shaped by the 9M 2019 earnings to be announced by companies.