Foreign Investors Renew Confidence in Nigeria, Invest N783 Billion in 9 Months
As the economy improves with Gross Domestic Product recording positive growth in the second quarter of 2017, foreign investors’ confidence in the Nigerian Stock Exchange is witnessing a boost. Bamidele Famoofo reports
Foreign Portfolio Investment on the Nigerian Stock Exchange in nine months ended September 30, 2017 stood at N783.34 billion ( about $ 2.56billion). The figure outperformed the N517.55 billion invested in the Nigerian capital market in full year 2016 by 51.36 percent.
It is a proof that foreign investors, who had decided to beat a retreat from the biggest economy in Africa during the time of recession, are beginning to have confidence again in doing business in Nigeria. Both foreign and domestic investments recorded a drastic drop on the Nigerian bourse in 2016.
Compared to the figure in 2015, transaction by foreign investors recorded a huge decline to the tune of 49.5% from N1.025 trillion in 2015 to only N517.55billion in 2016 while Domestic investment dropped from N880.56billion in 2015 to N633.82billion in 2016, representing a 28 % drop.
But the trend has since changed as foreign investment accounted for 47.31 percent of total investment in the market as at September 30, 2017 as Total Portfolio investment recorded on the Nigerian Stock Exchange in the review period stood at N1.656 trillion compared to N1.151trillion recorded in full year ended December 31, 2016.
Foreign portfolio investment in 2016 compared to the total investment made in the market as at December 31, 2016 stood at 44.95 percent, which is 2.36 basis points higher than the performance in 2016.
Notwithstanding the renewed confidence shown by foreign investors in Nigeria during the review period, Domestic investors have shown greater confidence in the economy as both the retail and institutional domestic investors committed more funds into the market than foreign investors. A track of three years performance revealed that more money has been committed into the capital market as at end of third quarter ended September 30, 2016 than was done since 2015.
Domestic investors which splashed N872.45billion on instruments offered for sale in the market as at September 30, 2017, accounted for 52.69 percent of total turnover in the review period, also outperformed their foreign counterparts which accounted for only 47.31 percent in the same period.
As at September 30, 2017, domestic investment in the capital market has exceeded the figure of full year 2016 which was put at N633.82billion, representing a growth of 37.65 percent.
Breakdown of investment by domestic investors puts Institutional investors ahead of retail domestic investors. As at September 30, 2017, contribution of Institutional Investors to total turnover by Domestic investors rose to N577.88billion from N355.02billion in full year 2016, representing 62.77 percent increase. On the retail end, investment increased by 5.66 percent from N278.80billion as at December 31, 2016 to N294.57billion as at September 30, 2017.
Meanwhile foreign inflow exceeds outflow as at end of third quarter in 2017 at N468.30billion compared to N315.04billion recorded as foreign outflow in the same period, leaving a surplus of N153.26billion.
Total transactions at the nation’s bourse decreased by 0.58% from N95.88 billion recorded in December 2016 to N95.32 billion (about $0.31 billion) in January 2017. In comparison to the same period in 2016, total transactions increased by 13.34% from the N84.10 recorded in January 2016.
Foreign investors conceded about 7.65% of trading to domestic investors. Total foreign transactions decreased by 0.02% from N44.02 billion recorded in December 2016 to N44.01 billion in January 2017. Domestic transactions also decreased by 1.06% from N51.86 billion to N51.31 billion within the same period.
Monthly foreign inflows outpaced outflows. There was a 16.01% increase in foreign inflows from N19.49 billion in December 2016 to N22.61 billion in January 2017. Foreign outflows decreased by 12.76% from N24.53 billion in December 2016 to N21.40 billion in January 2017.
In February, total transactions at the NSE decreased by 22.25% from N95.32 billion recorded in January 2017 to N74.11 billion ( about $ 0.24 billion) in February 2017. Also, the cumulative transactions from January to February decreased by 15.86% from N201.37 billion recorded in 2016 to N169.43 billion in 2017.
In February 2017, domestic investors outperformed foreign investors by 6.78%. Domestic transactions decreased by 22.88% from N51.31 billion recorded in January 2017 to N39.57 billion in February 2017 whilst foreign transactions also decreased by 21.52% from N44.01 billion to N34.54 billion within the same period.
There was a 28.79% decrease in foreign inflows from N22.61 billion in January 2017 to N16.10 billion in February 2017. Foreign outflows also decreased by 13.83% from N21.40 billion in January 2017 to N18.44 billion in February 2017.
As at end of March 2017, total transactions in the capital market increased significantly by 284.63% from N74.11 billion recorded in February 2017 to N285.05 billion ( about $ 0.93 billion) in March 2017. Also, the aggregate value of transactions from January to March increased by 52.67% from N297.68 billion recorded in 2016 to N454.48 billion in 2017.
In March 2017, domestic investors outperformed foreign investors by 7.02%. Domestic transactions increased by 285.49% from N39.57 billion recorded in February 2017 to N152.54 billion in March 2017. Foreign transactions also increased by 283.64% from N34.54 billion to N132.51 billion within the same period.
There was a major increase in foreign outflows from N18.44 billion in February 2017 to N108.87 billion in March 2017. Foreign inflows also increased by 46.83% from N16.10 billion in February 2017 to N23.64 billion in February 2017.
Contrary to the increase recorded in March, transactions decreased significantly by 80.74% from N285.05 billion in March 2017 to N54.90 billion ( about $ 0.18 billion in April 2017.
Again, domestic investors outperformed foreign investors by 18.22%. Total domestic transactions decreased by 78.73% from N152.54 billion recorded in March 2017 to N32.45 billion in April 2017. Foreign transactions also decreased by 83.06% from N132.51 billion to N22.45 billion within the same period.
Monthly foreign inflows outpaced outflows as foreign inflows decreased by 38.49% from N23.64 billion in March to N14.54 billion in April 2017. Foreign outflows also decreased by 92.73% from N108.87 billion in March to N7.91 billion in April 2017.
In comparison to the same period in 2016, total FPI transactions from January to April 2017 increased by 56.85% from N148.87 billion to N233.51, whilst the total domestic transactions increased by 27.85% from N215.77 billion to N275.87 billion.
There was a reversal of trend in the last two months in third quarter as foreign investors outperformed domestic investors by 8.13% in August. Total foreign transactions decreased significantly by 59.55% from N208.34 billion recorded in August 2017 to N84.27 billion in 2017. Total domestic transactions also decreased by 68.77% from N188.52 billion to N45.25 billion within the same period.
Foreign inflows decreased by 70.74% from N165.47 billion in August 2017 to N48.42 billion in September 2017. Foreign outflows also decreased by 16.38% from N42.87 billion in August 2017 to N35.85 billion in September 2017.