For the first time in five months, foreign investors have taken the lead from Nigerian investors and now account for the largest transactions at the stock market.
Data on domestic and foreign portfolio investments (FPI) obtained by The Nation at the Nigerian Stock Exchange (NSE) indicated that foreign portfolio investors led with 15.48 percent over domestic investors.
The latest update on FPI and domestic transactions showed that foreign investors accounted for 57.74 per cent of total transactions while domestic investors had 42.26 per cent for the month under review which ended April 30.
The report indicated that foreign investors traded N122.53 billion while domestic investors accounted for N89.70 billion, representing total transaction value of N212.23 billion for the period.
Capital Bancorp Plc Managing Director, Mr. Higo Aigboje said the latest FPI trend showed foreign investors’ confidence in the Nigerian economy.
“It’s a positive thing, it shows more confidence, they are voting with their money. Local investors should also take the cue and increase their investments in the market,” Higo said.
A four-month analysis showed that total transactions at the Nigerian equities market doubled to N1.09 trillion by the period ended April 30 compared with N509.38 billion recorded in the corresponding period ended April 30, last year. On the aggregate, domestic investors, who had dominated transactions in the first quarter, still sustained a lead of 7.56 percentage points for the four-month period ended April 2018.
The latest report also showed a sustained positive trend in FPIs with more inflow than outflow, meaning that foreign investors were investing more in Nigerian equities than they were taking out. The report showed 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.
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.
The latest update validated the positive FPI trend in the first quarter 2018. FPI report for the first quarter ended March 31, 2018 showed that total value of transactions by foreign investors grew by 80.9 per cent to N381.82 billion in first quarter 2018 compared with N211.06 billion recorded in corresponding period of 2017. Total foreign inflow and outflow rose to N206.35 billion and N175.47 billion respectively in first quarter 2018, indicating a positive net foreign investment position of N30.9 billion. This compared with total foreign inflow and outflow of N62.35 billion and N148.71 billion recorded in comparable period of 2017, which left the country with net FPI deficit of N86.36 billion in first quarter 2017.
Month-on-month analysis had shown a positive trend in net foreign investment inflow throughout the first quarter 2018. Foreign inflow totalled 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 of the year stood at N878.97 billion compared with N454.48 billion recorded in first quarter 2017. Domestic investors had accounted for N497.15 billion in first quarter of the year as against N243.42 billion in comparable period of 2017.
Foreign investors had dominated transactions between last August and November but were overtaken by domestic investors in December 2017. Foreign transactions had since 2011 consistently outperformed domestic transactions. However, domestic transactions marginally outperformed foreign transactions in 2016 and 2017, accounting for 52 per cent of the total transaction value in 2017.
There has also been a significant recovery in the pattern of transactions. Foreign transactions which had totalled N1.539 trillion in 2014, declined to N518 billion in 2016, but increased significantly by 133 per cent to N1.208 trillion in 2017, accounting for about 48 per cent of total transactions in 2017. The 11-year analysis showed that domestic transactions decreased by 62.46 per cent from N3.56 trillion in 2007 to N1.335 trillion in 2017. However, the performance in 2017 represented a significant increase of 111 per cent when compared with N634 billion recorded in 2016.
Source: thenation
