Foreign Investors Dominate Nigerian Equities with N800b Transactions

Foreign portfolio investors maintained lead as the dominant group in the Nigerian Equities Market in the past three months to emerge with the largest transactions of about N800 Billion in the first half of this year.

Trading data on domestic and Foreign Portfolio Investments (FPI) at the Nigerian Stock Exchange (NSE) obtained at the weekend showed that foreign investors’ transactions accounted for N799.7 Billion within the six-month period ended June 30, 2018, representing an increase of 85.9 per cent on N430.23 Billion FPI trading recorded in the comparable period of 2017.

Foreign investors marginally outpaced Nigerian investors with 50.07 per cent of total value of transactions in first half of 2018 compared with the first half of 2017 when Nigerian investors accounted for 54 per cent of total value of transactions.

Domestic investors traded N797.47 Billion worth of equities during the first half of 2018, 57.9 per cent increase on N505.03 Billion traded in comparable period of 2017. Altogether, total transactions at the equities market rose from N935.26 Billion in first half 2017 to N1.597 Trillion in first half 2018.

The report however showed a negative trend in FPI trading with more outflows than inflows. Net FPI deficit stood at –N38.41 Billion in first half 2018 compared with net positive position of N1.71 Billion recorded in first half 2017. Foreign inflows and outflows stood at N380.65 Billion and N419.06 Billion respectively in first half 2018 compared with inflows and outflows of N215.97 Billion and N214.26 Billion respectively in first half 2017.

The FPI report used two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

Month-on-month analysis showed that FPI transactions totaled N102.41 Billion in June, consisting of inflows of N47.96 Billion and outflows of N54.45 Billion. Total transactions at the equities market had dropped from N318.27 Billion in May 2018 to N187.78 Billion in June 2018.

The report indicated that foreign investors’ outflows from the equities market increased by 124.7 per cent to about N131 Billion in May as against N58.25 Billion in April. However, there was a 3.45 per cent decrease in foreign inflows to N62.06 Billion in May as against N64.28 Billion recorded in April.

Total transactions at the equities market increased by 49.96 per cent from N212.23 Billion recorded in April to N318.27 Billion in May. A five-month report showed that the cumulative transactions from January to May increased by 97.13 per cent to N1.409 Trillion in 2018 compared with N714.99 Billion recorded in the same period of 2017.

The latest report stated that the institutional composition of the domestic market increased by 97.87 per cent from N46.51 Billion in April to N92.03 Billion in May. The retail composition declined by 22.92 per cent from N43.19 Billion in April to N33.29 Billion in May.

In April, there was a positive net foreign inflow of N6.03 Billion in April 2018 and N36.91 Billion for the four-month period ended April 2018. In the comparable period ended April 2017, Nigerian equities had suffered net FPI deficit of N79.73 Billion. Further analysis indicated positive net foreign inflow of N30.88 Billion in first quarter 2018 compared with a negative net foreign investment position of N86.36 Billion in comparable first quarter 2017.

Month-on-month analysis had shown a positive trend in net foreign investment inflow throughout the first quarter 2018. Foreign inflow totaled N91.75 Billion in January 2018 as against outflow of N74.64 Billion. Foreign inflow and outflow stood at N44.89 Billion and N38.33 Billion respectively in February 2018 while foreign inflow and outflow recovered to N69.71 Billion and N62.50 Billion respectively in March 2018.

Total transactions at the Nigerian equities market in first quarter 2018 had stood at N878.97 Billion compared with N454.48 Billion recorded in first quarter 2017. Nigerian domestic investors had accounted for N497.15 Billion in first quarter 2018 as against N243.42 Billion in comparable period of 2017.

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