Amidst heightened political tension in the Nigerian economy, the total transactions done by foreign investors on the floor of the Nigerian Stock Exchange (NSE) rose by 26.53 per cent or N207.85 billion in the third quarter (Q3) of 2018 to N991.2 billion compared with N783.34 billion recorded in the period of 2017.
The proportion of foreign and domestic transactions thus narrowed from 47.31 and 52.69 per cent respectively in Q3 2017 to 49.38 and 50.62 per cent in Q3 2018.
According to a nine-month period Q3 trading analysis for the period ended September 30, 2018 obtained by Daily Sun, total transactions during the period under review increased from N1.66 trillion in 2017 to N2.01 trillion in 2018, with domestic investors accounting for N1.02 trillion in third quarter 2018 as against N872.45 billion in corresponding period of 2017.
Furthermore, foreign inflows increased from N468.30 billion in Q3 2017 to N477.68 billion in the third quarter 2018, while foreign outflows increased from N315.04 billion to N513.49 billion, compared with a surplus of N153.26 billion posted in comparable period of 2017, Nigeria suffered a foreign portfolio investment (FPI) deficit of N35.81 billion in Q3 2018.
The report which was released by the NSE, polled transactions from major custodians and capital market operators and it is widely regarded as a credible measure of the FPI trend. 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 (MoM) analysis showed sustained upbeat in foreign transactions, with a slight tinge of sell than buy.
Foreign transactions accounted for about 64.8 per cent of total transactions in September 2018 as against 53 per cent in August while foreign inflow and outflow however stood at N40.54 billion and N43.78 billion respectively in September compared with N36.66 billion and N34.31 billion respectively in the previous month.
Meanwhile the total transactions at the nation’s bourse dropped by 8.37 per cent from N146.07 billion recorded in July 2018 to N133.84 billion in August 2018. Cumulative transactions from January to August however increased by 22.99 per cent from N1.526 trillion recorded in 2017 to N1.877 trillion in 2018.
Foreign investors outperformed domestic investors by 6.06 per cent in August 2018. due to a significant decrease of 42.79 per cent in total domestic transactions from N109.9 billion in July 2018 to N62.87 billion in August 2018.
Total transactions at the NSE had reduced from N187.78 billion recorded in June 2018 to N146.07 billion in July 2018.
Domestic investors accounted for 50.48 per cent of total turnover in July 2018 as total domestic transactions increased by 28.72 per cent from N85.38 billion in June 2018 to N109.9 billion in July 2018. Domestic transactions were largely driven by the 55.48 per cent increase in the retail domestic participation which increased from N29.12 billion in June 2018 to N65.42 billion in July 2018.
Total transactions for the seven-month period ended July 2018 increased by 54.38 per cent from N1.129 trillion recorded in 2017 to N1.743 trillion in 2018.
Foreign portfolio investors were the dominant group in the Nigerian equities market in first half of this year with about N800 billion. 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 had 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 domestic investors accounted for 54 per cent of total value of transactions.