…as bank recapitalisation set to boost foreign interest
Transactions executed by foreign investors in equities listed on the Nigerian Exchange Group (NGX) rose to N598 billion in the first seven months of 2024, signalling increasing confidence among foreign equity players in the Nigerian economy. This compares to N185.62 billion that was recorded in the corresponding period of 2023, representing a year-on-year increase of 222 per cent, the July 2024 Foreign Portfolio Investment (FPI) report of the NGX shows.
This means foreign equity investors executed 19.32 per cent of the transactions recorded from January to July 2024, as against 8.62 per cent recorded during the same period in 2023, NGX reveals.
Domestic investors, on the other hand, executed 80.68 per cent of the equity transactions from January to July 2024, amounting to N2.497 trillion, out of the total N3.095 trillion equity transactions executed from January to July of this year.
In contrast, from January to July 2023, domestic investors accounted for N1.968 trillion out of the total N2.154 trillion equity transactions executed during that period.
The Nigerian equity market has seen one of the best outings in 2024, with the All-Share Index (ASI) of the NGX posting returns in the region of 28.35 per cent year-to-date. Some sectoral indices such as the NGX Main Board, NGX AFR Div Yield Index, NGX Oil/Gas Index, and NGX Industrial Goods Index outperformed the ASI during this period, with their year-to-date returns ranging from 35.79 per cent to 79.98 per cent as of the close of business on Friday, August 23, 2024.
The report further shows that unlike in 2023 when the bulk of the equity transactions were executed by the domestic institutional investors, amounting to N1.328 trillion as against the N640.44 billion worth of transactions carried out by the domestic retail investors, transactions on the NGX in 2024 were nearly split between domestic retail and domestic institutional investors.
According to the NGX FPI July 2024 report, year to date, retail domestic equity traders executed N1.271 trillion worth of transactions while domestic institutional equity traders executed N1.226 trillion worth of transactions.
“A comparison of domestic transactions in the current month and prior month (June 2024) revealed that retail transactions increased significantly by 138.48% from N114.02 billion in June 2024 to N271.92 billion in July 2024. Also, the institutional composition of the domestic market increased by 2.42% from N158.34 billion in June 2024 to N162.17 billion in July 2024,” NGX FPI July 2024 states.
Meanwhile, the on-going banking recapitalisation exercise is set to boost foreign interest in the Nigerian equity market. The recapitalisation exercise was embarked upon by deposit money banks in the country following the mandate from the Central Bank of Nigeria (CBN), instructing commercial banks to boost their capital base, through a mix of rights issues and public offerings.
Fidelity Bank was in the market to raise N127 billion through hybrid offer just as Guaranty Trust Holdings sought N400.5 billion from existing and new investors. Access Bank approached the capital market to raise N351.01 billion through a rights issue offer which closed on August 22, 2024.
Zenith Bank is currently in the market to raise N289.31 billion through hybrid offer of rights issue of 5.23 billion ordinary shares at N36 per share and a public offering of 2.77 billion ordinary shares at N36.5 per share.
The FCMB Group is also in the market to raise N110.94 billion through a public offering of 15.19 billion ordinary shares at N7.30 per share. The offer closes September 4, 2024.
Earlier this month, Rand Merchant Bank, one of the leading merchant banks in Africa, ranked Nigeria as the ninth most attractive country to invest in Africa, out of the 31 countries that were assessed in the exercise, thus placing Africa’s most populous nation as one of the best places to invest in Africa.
Employing a composite index that utilises parameters such as economic performance and potential, market accessibility and innovation, economic stability and investment climate, as well as social and human development, Nigeria scored 0.163 percent overall on the RMB Where to Invest in Africa Z-score. In 2023, Nigeria scored 0.15.
The 2024 RMB Where to Invest in Africa report was based on the input of experienced professionals and, in part, on work published in peer-reviewed journals to expand on its earlier model. The quantitative model underlying this report stands on the shoulders of the work done on prior editions, expanding the range of input data, extending the granularity, and constructing a robust tool to help guide investment decisions in a complex, post-COVID-19 world.
