FPI worsens as NSE posts N232.46bn turnover in January
Beyond doubt, the interest of expatriates in Nigerian stocks is fast waning despite the recent good performance posted by the domestic bourse to earn accolades from global observers.
This again played out in January, 2021 when share transactions at the exchange was dominated by local investors, who have continued to control the largest market share as foreign capital into the economy through stocks leaves in droves.
According to the latest Foreign Portfolio Investment (FPI) data released by the Nigerian Stock Exchange (NSE), total share investment deals in January stood at N232.46 billion.
The figure fell marginally by 1.27 per cent from 235.46 billion traded in January 2020 and 13.66 per cent below December 2020’s N269.24 billion share turnover value at the exchange.
Of the total transaction value in the month under review; foreign investors only contributed N47.52 billion or 20.44 per cent relative to N184.94 billion worth of shares traded by their local counterparts which represents 79.56 per cent.
Compared to January and December 2020, FPI has further plunged from 29.86 per cent and 25.97 per cent in the two months respectively to its current 20.44 per cent.
Meanwhile, further analysis of the January FPI report showed aggressive seel-off drive by expatriates to eject their investment from the stock market as the total outlow during the period stood at N30.79 billion, hence outpacing an inflow of N16.73 billion.
On the other hand, while retail domestic investors pushed N67.44 billion deals during the period, the institutional investors facilitated share trades worth N117.50 billion.
What you should know
Few years ago, participation of the portfolio investors at the Nigerian bourse dominated the market, and thus, the market was dependent on them such that it caught cold whenever the expatriates sneezed.
However, the trend has reversed and today, the bourse witnessed more participation from local investors. For instance, total domestic transactions accounted for about 74 per cent of the total transactions carried out in 2020, whilst foreign transactions accounted for about 26 per cent of the total transactions in the same period.
Analysts in some quarters have described this partly as a good development that allows investment planning in the market, believing that domestic investors have nowhere to go even in times of crises unlike their foreign counterparts who pull of the market at any given opportunity.
On the other hand, some expert said if investors from around the world are shunning equities in Nigeria, relevant authorities should be concerned. They believe the expatriates’ action must have been a reaction to economic metrics in the country that are making it difficult to make case for robust foreign investment in the market.