NewGold ETF Attracts N4.41bn from Offshore Investors

By Dipo Olowookere

Exchange-Traded Funds (ETFs) space in Nigeria has continued to attract more offshore investors as it has remained as an avenue for them to diversify their investment portfolios.

Business Post reports that the demand for the form of investment asset has remained high despite foreign exchange (FX) restrictions in the country.

Recall that a month ago, this newspaper reported that foreign portfolio investors use this means to convert their Naira assets into Dollar as the nation grapples with forex liquidity.

Recently, the Nigerian Exchange (NGX) Limited released its quarterly report on the ETFs market for Q2 and it was revealed that foreign transactions increased by 99.64 per cent even as 10 stockbrokers drove 99.9 per cent of total transaction value and 97.3 per cent of total volumes of ETFs.

It was observed that the NewGold ETF was the most active with its value rising by 99.58 per cent to N4.41 billion, taking the lead in both value and volume traded.

The report showed that offshore investors traded 524.241 units of NewGold valued at N4.41 billion, while Vetiva Griffin 30 followed with 501,48 units worth N8.12 million.

In addition, Vetiva Industrial Goods transacted 248,469 units valued at N4.52 million, Meristem Value ETF sold 115,58 units valued at N1.87 million, while Stanbic IBTC ETF traded 19,774 units valued at N1.48 million.

Analysis of the report showed that Rencap led in terms of brokers’ performance as regards value, retaining its top position in this category, having traded about 69.7 per cent.

RMB followed, accounting for 12.72 per cent while ABSA Securities accounted for 9.04 per cent of transactions.

On the other hand, Vetiva led in terms of volume, accounting for 31.55 per cent in the period under review. Rencap followed with 24.9 per cent while IONE accounted for 14.66 per cent volume of transactions.

However, market capitalisation declined by a record 39.7 per cent between both quarters as the commodity-backed ETP suffered net outflows of 54 per cent, from N12.0 billion in Q1 2021 to N5.5 billion in Q2 2021, due to FX restrictions in the regulatory climate.

Furthermore, trade volumes fell by approximately 69 per cent from about 5.3 million units in Q2 2020 to 1.6 million units in Q2 2021.