Foreign portfolio transactions hit N589b in first half

Foreign investors, who dominated the Nigerian capital market, struck deals worth about N589 billion during the first half of this year, according to the latest report on foreign portfolio investment (FPI) in Nigeria obtained at the weekend.

The foreign portfolio investment (FPI) report is coordinated by the Nigerian Stock Exchange (NSE), Nigeria’s only stock exchange and the gateway to the stock market. The FPI report uses two key indicators-inflow and outflow to gauge foreign investors’ mood and participation in the stock market as a measure of investors’ appetite and risk consideration 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 and major investment bankers, stockbrokers, custodians and other capital market operators.

The six-month report for the period ended June 2015 showed that total foreign portfolio investment outflow stood at N303.59 billion while inflow stood at N285.40 billion, totaling N588.99 billion. Foreign portfolio investors accounted for about 53 per cent of total transaction value during the period while domestic investors accounted for 47 per cent. Total transactions stood at N1.114 trillion, with domestic investors accounting for N525 billion.

With the outflow larger than inflow, the report however indicated a deficit of N18.2 billion during the period, which underlined the selling pressure that had pervaded the market most part of this year. Nigeria had recorded a net foreign portfolio deficit of N154.14 billion in 2014, overriding a modest positive net flow of N20.48 billion recorded in 2013. The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014. In 2013, total foreign inflow stood at N531.26 billion compared with outflow of N510.78 billion.

The latest report meanwhile showed a month-on-month recovery in June. Total foreign inflow stood at N42.67 billion as against outflow of N26.98 billion in June, totaling N69.65 billion. Total transactions stood at N203.45 billion, with domestic investors contributing N133.80 billion. The foreign-domestic ratio stood at 34.24 per cent/65.76 per cent in June.

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In May, total foreign inflow had stood at N38 billion as against outflow of N41.77 billion, totaling N79.77 billion. Total transactions thus stood at N145.45 billion, with domestic investors accounting for N65.68 billion. Foreign investors accounted for 54.84 per cent while domestic investors accounted for 45.16 per cent.

The market had recorded its first positive flow in April, after successive declines throughout the first quarter. Total foreign inflow rose to N54.20 billion in April as against outflow of N49.75 billion, representing a modest positive net inflow of about N4.45 billion. Total foreign transactions thus stood at N103.95 billion as against total domestic transactions of N102.91 billion during the month.

In March, foreign portfolio outflows of N52.41 billion outpaced inflows of N50.15 billion. The first quarter had seen steady foreign portfolio deficits as investors weighed macroeconomic and political risks. Foreign outflows totaled N81.60 billion in February 2015 as against inflow of N52.35 billion, indicating a significant increase on the downtrend that started the year when foreign portfolio outflow was N51.08 billion against inflow of N48.03 billion.

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