- Expatriates continue to shun market
Investors’ engagement at the Nigerian Stock Exchange (NSE) suffered noticeable decline in July as trade turnover for the month shrank to show loss risk appetite particularly by foreign investors.
The development was in contrast with relaxed lockdown and other measures put in place to restart the Nigerian economy after a breakdown created by Coronavirus pandemic.
Based on the latest report released today by the management of the bourse, turnover suffered decline as trade value stood at N103.21 billion, 19.92 per cent lower than N128.88 billion investors pushed in June, 2020.
The report particularly shows continuous lack of interest by foreign investors in the Nigerian market, a trend that has persisted for some times.
According to the NSE data, foreign participation remained on the low side at N34.59 billion or 33.51 per cent of total trade value in the month.
Consequently, domestic investors continued to dominate activities during the month by transacting N68.62 billion, equivalent to 66.49 per cent of total transaction.
Regardless, both categories of investors lost momentum during the month. Foreign traders push stocks worth N34.59 billion against N56.34 billion in June, while their domestic counterparts followed suit with N68.62 billion relative to N72.54 billion recorded in the previous month.
Further breakdown of July’s foreign portfolio investment (FPI) data reflect that most participation by the expatriate was targeted at pulling out from the market.
Through the foreign stock traders, the Nigerian economy recorded an inflow of N13.70 billion, against a higher amount of N20.89 billion as the value of funds ejected from it by the expatriates in the same month.
Meanwhile, on a year-to-date basis, foreign investors have staked N143.65 billion and also ejected N287.57 billion, leaving a net capital outflow of N143.92 billion.
According to analysts, the trend of loss of appetite in the Nigerian stocks by the foreign players has seen N2 being repatriated whenever N1 is invested in the market.
They ascribed this to internal economic headwinds confronting the country and the general uncertainties created by Coronavirus (COVID-19) pandemic.
Market observers in some quarters believe that acute scarcity of foreign exchange in Nigeria is a chief factor responsible for foreign investors’ exodus from the domestic bourse as they often spend months before being able to repatriate their money.
“If the forex issue could be tackled, I can bet that the foreign investors know that there is huge opportunity in the market right now as most of the liquid and elite stocks in the market are already undervalued.
“However, for the expatriates, the first thing they will consider before anything is how much the economy can support their need to repatriate whenever they feel like. If that is not happening, they are not ready to be trapped here when their investments should be appreciating elsewhere,” a market player said.
In view of the current situation, while some experts crave return of expatriates, others have called for the encouragement of local investors to do more and continue to claim larger share to prevent the market from falling flat whenever foreign investors resort to sell-offs.