October 26, 2021/CSL Research
Based on the recently released NGX Domestic & Foreign Investment report for September 2021. The Nigerian equities market witnessed improved sentiments as total value traded on the local bourse increased, snapping the two months of consecutive decline. Based on the data, the total value traded rose by 32.1% m/m to N118.2bn (US$285.8m) in September from N89.4bn (US$217.5m) in August 2021. Participation from domestic institutional investors solely lifted the total activity level in September, rising by 92.9% m/m to N62.0bn (US$150.0m). Comparatively, the benchmark index, All Share Index (ASI), moderated to a YTD loss of 0.1% at the end of September 2021 from a YTD loss of 2.6% in August.
Institutional investors dominated transactions at the domestic front, up 92.9% m/m to N62.0bn (US$150.0m) from N32.2bn (US$78.3m) in August 2021. Conversely, the activity level among retail investors was down marginally by 0.4% m/m to N31.8bn (US$76.8m) from N31.9bn (US$77.6m) in August. On the other hand, foreign inflows increased, up 11.3% m/m to N11.9bn (US$28.9m) as foreign outflows declined by 15.2% m/m to N12.4bn (US$30.0m). Consequently, net outflows contracted to N0.5bn (US$1.2m) in September from N3.9bn (US$9.5m) in August. Sadly, FX illiquidity continues to fuel foreign apathy towards Nigerian risk assets, particularly equities.
Following the bearish sentiments that prevailed in the first half of 2021, the local bourse saw a bullish trend in Q3 2021 as the NGX ASI gained in all months of the quarter (July-1.7% q/q; August-1.7% q/q; and September-6.1% q/q). The dual impact of impressive H1 2021 results released by companies in some sectors such as Industrial, Telecoms and Oil & Gas, alongside the announcement of interim dividends propelled increased buying activities. Looking ahead, we are of the view that activity level will remain high in the last quarter. One, we have seen Large Value Transactions (LVTs) in the market in October, driven by activities around FBNH. In addition, we expect investors to take positions in dividend-paying stocks in anticipation of full-year dividends.
