Foreign portfolio investor transactions rise to $2.71bn on the Nigerian Stock Exchange

FOREIGN portfolio investor transactions in Nigerian equities increased by N208bn ($570m) to N991.2bn ($2.71bn) in the third quarter of 2018 narrowing the gap between foreign participation and domestic transactions on the stock market.

According to the latest figures published by the Nigerian Stock exchange (NSE), total transactions by foreign investors rose by 26.53% or N207.85bn in third quarter of 2018 to N991.2bn compared with N783.34bn recorded in comparable period of 2017. Over the weekend, the NSE published its third-quarter trading analysis for the nine-month period that ended on September 30, showing that the proportion of foreign/domestic transactions narrowed from 47.31/52.69% in the third quarter 2017 to 49.38/50.62% in the third quarter of 2018.

Total transactions during the nine-month period increased from N1.66trn in 2017 to N2.01trn in 2018, with domestic investors accounting for N1.02trn in third quarter of 2018 compared with N872.45bn in corresponding period of 2017. While foreign inflow increased to N477.68bn from N468.3bn in the third quarter 2017 in third quarter 2018, there was  a marked increase in foreign outflow to N513.49bn from N315.04bn.

This implies that Nigeria suffered a foreign portfolio investment deficit of N35.81bn in third quarter 2018 compared with a surplus of N153.26bn in comparable period of 2017. This report, polled transactions from major custodians and capital market operators and is widely regarded as a credible measure of the foreign portfolio investment (FPI) trend.

It 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 sustained upbeat in foreign transactions, with a slight tinge of sell than buy.

Foreign transactions accounted for about 64.8% of total transactions in September 2018 as against 53% in August. Foreign inflow and outflow however stood at N40.54bn and N43.78bn respectively in September compared with N36.66bn and N34.31bn respectively in the previous month.

Total transactions at the Nigerian stock market had dropped by 8.37% from N146.07bn recorded in July 2018 to N133.84bn in August 2018. Cumulative transactions from January to August however increased by 22.99% from N1.526trn recorded in 2017 to N1.877trn in 2018.

Foreign investors outperformed domestic investors by 6.06% in August 2018 and there was a significant decrease of 42.79% in total domestic transactions from N109.9bn in July 2018 to N62.8bn in August 2018. Total transactions at the NSE had reduced from N187.78bn recorded in June 2018 to N146.07bn in July 2018.