Election jitters make foreign institutional investors to withdraw $152m from the Nigerian stock market in February

ELECTION jitters made foreign institutional investors withdraw a whopping N55bn ($152.4m) from the Nigerian Stock Exchange (NSE) in February as fears about the security of investments created a capital flight crisis.

Nigeria held her presidential and National Assembly elections on February 23, with governorship and state houses of assembly polls taking place on March 9. Due to irregularities in some states, supplementary elections were held over the weekend of March 23, with all the polls witnessing some form of electoral violence that involved ballot box snatching at varying degrees of thuggery.

Ahead of the polls, several investors had moved their capital out of Nigeria as they were uncertain about what would happen. According to the NSE, foreign outflows from the stock market increased by 97.8% to N55.01bn in February from N27.81bn in January 2019, although that foreign inflows also rose by 91.24% to N43.93bn from N22.97bn between January and February.

In its latest foreign portfolio investment report, the NSE added that in February, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 6%. A further analysis of the transactions executed between January and February revealed that total foreign transactions increased by 48% from N66.85bn in January to N98.94bn in February.

Also, the value of the total transactions executed in the domestic market by institutional investors outperformed retail investors by 8%. As of February 28, total transactions at the nation’s bourse increased by 54.06% from the N122.08bn recorded in January to N188.08bn ($613.9m) in February.

According to the NSE, the performance in February, when compared to the that of the same period in the previous year, revealed that total transactions reduced by 11.3%. Domestic investors were further categorised into retail and institutional investors.

Total retail transactions increased by 38.26% from N29.66bn in January 2019 to N41.01bn in February. Also, the institutional composition of the domestic market increased significantly by 88.15% from N25.58bn in January to N48.13bn in February 2019, indicating a higher participation by institutional investors over their retail counterparts in February.

Foreign transactions, which stood at N1.539tn in 2014, declined to N1.219tn in 2018. Over a 12-year period, domestic transactions decreased by 66.68% from N3.556tn in 2007 to N1.185tn in 2018.

Total foreign transactions accounted for about 51% of the total transactions carried out in 2018, while domestic transactions accounted for about 49% of the total transactions in the same period. With the elections over now, foreign institutional investors are expected to return to the market.