Analysts have attributed the recent increase in investment recorded on the floor of the Nigerian Stock Exchange to a lot of reasons, especially on the portfolio investors’ cash trapped in the country.
The MD/CEO, Capital Square Limited and the Acting Chairman Financial Group, Lagos Chambers Of Commerce and Industry (LCCI), Obinna Anyanwu, explained that at the beginning of the pandemic, most portfolio investors had sold off their shares only to re-invest the funds when they could novestments.
Anyanwu said, “Before the lockdown, while the world was getting into COVID-19 crisis, the country experienced scarcity foreign exchange, and exchange rate began to go up as the naira was taking a heat from all the other major currencies.
But as that happened, the CBN reacted by subtly devaluation, but they were not clear about it, and this made the Dollar to go up from N360 to N380, which created some level of uncertainty in the market, and a couple of these funds had to exit.
“However, these funds that have gotten out of trading, which were withdrawn by the portfolio investors made the exchange to move up at that point in time.
Secondly, the remaining of those funds that they were unable to move out of the country, as they were stocked in the country was reinvested by these portfolio investors since they could not get out of the country so that they can still remain players in the market.”
He pointed out that at this period, that no economy in the world can yield returns on investment like the Nigerian economy, explatment like the Nigerian economy, explaining that the global economy is generally affected.
Commenting on local investors, the financial analyst noted that there is some speculation that a few more funds came into the country due to the quantitative easing that was happening globally, adding that those money were plunged into the stock market since there is high rate of returns in this economy.
“Again internally, some Nigerians that might have held their money in current accounts that are also looking for returns may have probably given mandate to their portfolio investors, assets managing companies they use out there, and also security trading companies to get some stocks for them, which has automatically boosted investment,” he stressed.
According to a recent NSE report, a total turnover of 1.495 billion shares worth N12.894 billion in 20,982 deals were traded on by investors on the floor of the exchange, in contrast to a total of 2.440 billion shares valued at N19.932 billion that exchanged hands in week of review in 18,918 deals.
“The Financial Services industry (measured by volume) led the activity chart with 1.238 billion shares valued at N8.424 billion traded in 12,835 deals; thus contributing 82.82 percent and 65.33 percent to the total equity turnover volume and value respectively.” The report stated.
The report also revealed that the healthcare industry followed with 72.953 million shares worth N386.138 million in 465 deals, while the third place was the consumer goods industry, with a turnover of 48.567 million shares worth N1.904 billion in 2,611 deals.