Foreign investors’ appetite for Nigerian equities increased in February 2021, despite fears over dollars scarcity.
Details of domestic and foreign portfolio participation in equity trading obtained from the Nigerian Stock Exchange by Ripples Nigeria on Sunday shows.
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According to the data from January to 28th February 2021, total foreign transactions increased by 30.62 percent to N62.07billion (about $151.23million) from N47.52billion (about $120.78million) recorded in January.
Breakdown of the figure shows that out of the N62.07 billion, N23.02 billion was recorded as inflow, while N39.05 billion transaction as outflow.
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On a monthly basis, the Nigerian Stock Exchange polls trading figures from major custodians and market operators on their foreign portfolio investment (FPI) flows.
The FPI outflow includes sales transactions or liquidation of portfolio investments through the stock market, whilst the FPI inflow includes purchase transactions on the Nigerian Stock Exchange (equities only).
However, when the domestic and foreign transactions recorded is added there was a decrease by 7.26 percent in market activity in February.
In January, N232.46billion (about $590.82million) total transaction was recorded, while February recorded N215.58billion (about $525.21million). Indicating a gap of N16.88 billion.
The fall in performance of the equity market in February was largely due to Domestic Investors transactions.
The report reads, “Total domestic transactions decreased by 16.99 percent from N184.94billion in January to N153.51billion in February 2021.”
“A comparison of domestic transactions in the current and prior month (January 2021) revealed that retail transactions decreased by 20.23 percent from N67.44billion in January 2021 to N53.80billion in February 2021. The institutional composition of the domestic market also decreased by 15.14 percent from N117.50billion in January 2021 to N99.71billion in February 2021. ”
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Also, the report revealed that over the last 14 years, domestic transactions decreased by 59.54 percent from N3.556 trillion in 2007 to N1.439 trillion in 2020, whilst foreign transactions increased by 18.45% from N616bn to N729bn over the same period.
For the breakdown of 2020 market activity, NSE noted that total domestic transactions accounted for about 74 percent of the total transactions carried out in 2020, whilst foreign transactions accounted for about 26 percent of the total transactions in the same period.
“The transaction data for 2021 shows that total foreign transactions was circa N109.59billion, whilst total domestic transactions was circa N338.45billion,” the report said.