Domestic, foreign portfolio investors in N323.4bn NGX deals in Jan. 2022

EMERGING DATA POLLED BY THE NIGERI AN EXCHANGE (NGX) on foreign portfolio investments into Nigeria through the equities market show a 39.1 percent year on year acceleration to N323.4 billion in January 2022, up from N232.5 billion in the same period of 2021, as trading activities set out on a bullish tone on the back of bolstered investor confidence in the market and the low volatile environment of the exchange.

The transaction figure (N323.4 billion) also rose 104.3 percent month on month from N158.3 billion reported in December 2021, as the total value of transactions executed by domestic investors outperformed the total transactions executed by foreign investors by 74 percent, the January data published by the NGX show.

Foreign portfolio investment (FPI) has always contributed the most amount to capital inflows into the Nigerian economy and consequently, accounted for $4.31 billion or 73.61 percent of the total capital importation, followed by ‘other investments,’ which accounted for $1.33 billion or 22.73 per cent, according to a recent report by the National Bureau of Statistics (NBS) on capital importation into Nigeria in nine months of 2021. However, the majority of investors in 2021 were showing some apathy towards the fixed income and money market instruments as they cautiously traded in the market after the pandemic-induced lull.

Meanwhile, a reflection of the broad-based rally recorded in January came as the Nigerian equity market opened 2022 on a very strong note as the benchmark All Share Index (ASI) gained 9.1 percent month on month to close on 46,624.67 points, while the market capitalisation inched higher above N25 trillion driven largely by market reactions on BUA Foods’ listing by introduction on the NGX, the share buyback programme by Dangote Cement and the earnings report from a number of heavyweights, which lifted market sentiments and drove broadbased buying interest across the local bourse.

In the same vein, the sectoral performances were majorly northward with four key sectors closing higher while only one index ending in the bearish zone.

The oil and gas sector was the lead gainer buoyed by strong buying interest which supported positive sentiments in Seplat Petroleum and the declaration of a strong FY-2021 earnings report by Total Energies. Also, the banking and consumer goods sectors maintained bullishness from the positive earnings announcements from Ecobank International, Fidelity Bank and Guinness Nigeria, which drove the sectors higher and, rounding up the gainers’ chart, price appreciation in BUA Cement and positive earnings report and gains in Dangote Cement drove the industrial goods sector higher during the month. On the other hand, the insurance sector emerged as the lone loser during the month.

Not drifting away from the activities of portfolio investors in January 2022, the data obtained from the NGX revealed that domestic investors have maintained their charge in the market as they recorded a total of N282.1 billion in the review month, up from N122.9 billion in December of 2021, while their foreign counterparts carried a total of N41.3 billion between December and January 2022. Also, the data show that institutional investors outperformed retail investors by 32 percent.

But a comparison of domestic transactions in the month under review and the prior month (December 2021) revealed that retail transactions increased by 153.21 percent from N37.74 billion in December 2021 to N95.56 billion in January 2022. However, the institutional composition of the domestic market increased by 118.91 percent from N85.20 billion in December 2021 to N186.51 billion in January 2022.

Meanwhile, the transaction data for 2022 show that total domestic transactions are N282.07 billion, whilst total foreign transactions are N41.31 billion, with the performance of the market over a 15 year period showing that domestic transactions decreased by 58.8 percent from N3.56 trillion in 2007 to N1.47 trillion in 2021, whilst foreign transactions also decreased by 29.38 percent from N616 billion to N435 billion over the same period. This means that total domestic transactions accounted for about 77 percent of the total transactions carried out in 2021, whilst foreign transactions accounted for about 23 percent of the total transactions in the same period.