In August, the Nigerian stock market saw a big drop in trading activity, falling to its lowest level in four months. This decline, which amounted to a 62.65% decrease in trading volume compared to July, marks a change from the previous trend.
However, in August, things took a different turn. Foreign and domestic trading both decreased, with foreign transactions going from N40.54 billion in July to N37.16 billion in August, and domestic trades dropping from N662.44 billion to N225.40 billion.
While foreign investments slightly increased to N13.79 billion, the money leaving the country dropped to N23.37 billion.
Temitope Omosuyi, an investment strategy manager at Afrinvest Limited, said that the decline in August can be attributed to various factors, including high market prices, disappointing performance reports from non-financial companies, and higher interest rates. Investors might be waiting for prices to go down before getting back in.
The market started August on shaky ground due to underwhelming earnings reports from many companies.
Akintoye Adelakun, a portfolio manager in Lagos, pointed out that investors have mixed feelings about the market. Some see it as overvalued, while others see opportunities. However, foreign exchange issues are still discouraging foreign investment.
In 2023, domestic transactions totaled about N2.194 trillion, while foreign transactions amounted to around N222.78 billion.
Conclusion
the Nigerian stock market’s recent dip to a four-month low reflects the ongoing challenges and uncertainties faced by investors. Despite initial optimism fueled by President Bola Tinubu’s reform efforts, factors such as overpricing, disappointing performance reports from non-financial institutions, and rising interest rates have contributed to the market’s instability.
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