Indications are that foreign investors are yet to fully return to the Nigerian Capital Market despite incentives being provided by the Nigerian authorities to woo them back. Data available at the Nigerian Stock Exchange has however shown a significant increase in transactions at the Exchange in 2017 compared to 2016.
According to data obtained from the Exchange the total transactions at the nation’s bourse increased by 7.13 per cent from N205.61billion recorded in May 2017 to N220.27billion in June 2017. Also, total transactions for the first half of the year increased by 49.78 per cent from N624.41 billion recorded in 2016 to N935.26 billion in 2017. Domestic investors outperformed foreign investors by 7.82 per cent. Total domestic transactions increased by 7.53 per cent from N110.42 billion recorded in May 2017 to N118.74 billion in June 2017. Foreign transactions also increased by 6.66 per cent from N95.19 billion to N101.53 billion within the same period.
A break down of the transaction at the Exchange showed that in January a total of N95.32 billion of transactions took place. Of this amount N44.01 billion was from foreign portfolio investors while N51.31 billion or 53.1 per cent was carried out by domestic investors. In the month of February while the total transaction recorded was N74.11 billion, N34.5 billion was by foreign investors while N39.57 billion was by local investors. In March the total transactions leaped to N285.05 billion in which N132.5 billion was by foreign investors and N152.54 billion was local investment in the market. In April the total investment dropped to N54.9 billion of which N22.45 billion was foreign and N32.45 billion local.
In the same vein in May the total investment rose to N205.61 billion as foreign investors put in N95.19 billion while local investors share was N110.42 billion. In June total investment rose to N220.27 billion of which foreign content was N101.53 billion while local investors contributed N118.74 billion.
According to the stock Exchange “monthly foreign inflows outpaced outflows. However, foreign inflows decreased by 10.95 per cent from N73.15 billion in May 2017 to N65.93 billion in June 2017 while foreign outflows increased by 38.09 per cent from N22.04 billion in May 2017 to N35.60 billion in June 2017.
In comparison to the first half of 2016, total foreign portfolio investment FPI transactions increased by 59.81per cent from N269.22 billion to N430.23, whilst the total domestic transactions increased by 42.19 per cent from N505.03 billion to N355.19 billion.”
It said that since 2011, foreign transactions have consistently outperformed domestic transactions. However, domestic transactions marginally outperformed foreign transactions in 2016, accounting for 55 per cent of the total transaction volume in 2016. Also, foreign transactions have further declined by 66.34 per cent from N1, 539 billion in 2014 to N518 billion in 2016, representing about 45 per cent of total transactions in 2016.
However the domestic composition of transactions on The Exchange between January and June 2017 has shown increase by domestic investors. The institutional investors composition of the domestic market decreased by 17.09 per cent from N67.95 billion recorded in May to N56.34 billion in June 2017. However, the retail composition increased by 46.92 per cent from N42.47 billion to N62.40 billion within the same period. This indicates a higher participation by retail investors over their institutional counterparts for the first time this year.