Foreign investors increase stakes on equities

Foreign portfolio investors increased the value of their buy orders for Nigerian equities by 61.4 per cent at the onset of this quarter, halting a sell-off that had seen more outflows than inflows all through the first quarter of this year.

For the first time this year,  equities recorded positive foreign portfolio transactions as inflows from foreign portfolio investors (FPIs) increased from N25.89 billion in March to N41.78 billion in April.

The latest report on foreign portfolio investments (FPIs), released by the Nigerian Stock Exchange (NSE), showed that foreign portfolio inflows outpaced outflows by N6.64 billion in April, the first positive closing this year.

Foreign inflows stood at N41.78 billion as against outflows of N35.14 billion, indicating 37.1 per cent increase in total foreign transactions from N56.09 billion in March 2019  to N76.92 billion in April 2019. With more activities by foreign investors, who dominate transactions at the market, total transactions at the market consequently increased from N110.11 billion in March to N148.9 billion in April. Foreign investors accounted for 51.66 per cent of total transactions in April as against 48.34 per cent by domestic investors, sustaining a familiar trend of foreign dominance.

The FPI report, coordinated by the NSE, aggregates transactions from major custodians and capital market operators and it is widely regarded as a credible measure of the FPI trend. The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.

Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. Segmental analysis delineates the proportion of foreign to local participation, institutional to retail investors as well as the momentum of activities among others.

The country had suffered a net deficit of N26.6 billion in foreign portfolio transactions in the first quarter of this year amidst fears of political and macro-economic uncertainties. It recorded a negative balance of N26.6 billion in inflow and outflow transactions by foreign portfolio investors in first quarter 2019 compared with a positive balance of N30.88 billion recorded in comparable period of 2018.