The Nation Newspaper

Tag: Foreign portfolio

  • Foreign portfolio investments decline by 65%

    Foreign portfolio investments in the stock market have declined by about 65 per cent as political risks and tough macroeconomic outlook continued to moderate investors’ appetite for equities.

    Latest report on foreign portfolio investments (FPI) showed that transactions by foreign investors dropped by N66.24 billion or 64.68 per cent to N36.17 billion in July 2018 compared with N102.41 billion recorded in June 2018.

    Trading data on domestic and foreign portfolio investments (FPI) at the Nigerian Stock Exchange (NSE) obtained by The Nation indicated a slump in foreign transactions, which dragged down the overall market turnover by 22.2 per cent. However, investors increased their turnover by 28.7 per cent.

    The FPI report used 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 investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

    However, for the first time in three months, FPI recorded positive net inflow with more inflow than outflow. Foreign inflow stood at N19.83 billion as against outflow of N16.34 billion in July 2018 as against inflow of N47.96 billion and outflow of N54.45 billion in June 2018.

    Total transactions at the NSE reduced from N187.78 billion recorded in June 2018 to N146.07 billion in July 2018. Domestic investors accounted for 50.48 per cent of total turnover in July 2018 as total domestic transactions increased by 28.72 per cent from N85.38 billion in June 2018 to N109.9 billion in July 2018. Domestic transactions were largely driven by the 55.48 per cent increase in the retail domestic participation which increased from N29.12 billion in June 2018 to N65.42 billion in July.

    Total transactions for the seven-month period ended July 2018 increased by 54.38 per cent from N1.129 trillion recorded in 2017 to N1.743 trillion in the year.

    Foreign portfolio investors were the dominant group in the equities market in first half of this year with about N800 billion. Foreign investors’ transactions accounted for N799.7 billion within the six-month period ended June 30, 2018, representing an increase of 85.9 per cent on N430.23 billion FPI trading recorded in the comparable period of 2017.

    Foreign investors had marginally outpaced Nigerian investors with 50.07 per cent of total value of transactions in first half of 2018 compared with the first half of 2017 when investors accounted for 54 per cent of total value of transactions.

    Domestic investors traded N797.47 billion worth of equities during the first half of 2018, 57.9 per cent increase on N505.03 billion traded in comparable period of 2017. Altogether, total transactions at the equities market rose from N935.26 billion in the first half of 2017 to N1.597 trillion in first half of 2018.

    The report, however, showed a negative trend in FPI trading with more outflows than inflows. Net FPI deficit stood at –N38.41 billion in first half of 2018 compared with net positive position of N1.71 billion recorded in the first half of 2017. Foreign inflows and outflows stood at N380.65 billion and N419.06 billion in first half 2018 compared with inflows and outflows of N215.97 billion and N214.26 billion respectively in the first half of 2017.

    Month-on-month analysis showed that FPI transactions totalled N102.41 billion in June, consisting of inflows of N47.96 billion and outflows of N54.45 billion. Total transactions at the equities market had dropped from N318.27 billion in May to N187.78 billion in June.

    The report indicated that foreign investors’ outflows from the equities market increased by 124.7 per cent to about N131 billion in May as against N58.25 billion in April. However, there was a 3.45 per cent decrease in foreign inflows to N62.06 billion in May as against N64.28 billion recorded in April.

    Total transactions at the equities market increased by 49.96 per cent from N212.23 billion recorded in April to N318.27 billion in May.

    A five-month report showed that the cumulative transactions from January to May increased by 97.13 per cent to N1.409 trillion in 2018 compared with N714.99 billion recorded in the same period of 2017.

    The latest report stated that the institutional composition of the domestic market increased by 97.87 per cent from N46.51 billion in April to N92.03 billion in May. The retail composition declined by 22.92 per cent from N43.19 billion in April to N33.29 billion in May.

    In April, there was a positive net foreign inflow of N6.03 billion in April 2018 and N36.91 billion for the four-month period ended April 2018. In the comparable period ended April 2017, Nigerian equities had suffered net FPI deficit of N79.73 billion. Further analysis indicated positive net foreign inflow of N30.88 billion in first quarter 2018 compared with a negative net foreign investment position of N86.36 billion in comparable first quarter of 2017.

    Month-on-month analysis had shown a positive trend in net foreign investment inflow throughout the first quarter 2018. Foreign inflow totalled N91.75 billion in January 2018 as against outflow of N74.64 billion. Foreign inflow and outflow stood at N44.89 billion and N38.33 billion respectively in February 2018 while foreign inflow and outflow recovered to N69.71 billion and N62.50 billion in March 2018.

    Total transactions at the equities market in the first quarter of 2018 had stood at N878.97 billion compared with N454.48 billion recorded in first quarter 2017. Nigerian domestic investors had accounted for N497.15 billion in first quarter 2018 as against N243.42 billion in comparable period of 2017.

    FSDH, however, noted that despite strong growth in the information and communication and the construction sectors, the two sectors can achieve higher growth rates given the enormous potentials inherent in these sectors.

    FSDH pointed out that observed contraction in the real estate sector can be reversed if government at all levels partners with private sector operators to provide affordable housing units for Nigerians.

  • Foreign portfolio inflows rise to $3.32b

    Foreign portfolio inflows reached an all-time high of $3.32 billion during the third quarter of 2017, a report by FBN Capital, has shown.

    The report, titled “An easing of Balance of Payment Pressures in Q3”, said the direct portfolio and other investment flows were positive in the quarter.

    FBN Capital said portfolio inflows of $3.32 billion were the highest since second quarter of 2013, when the figure stood at $4.46 billion in the wake of Nigeria’s inclusion the previous year in JP Morgan’s local currency, government debt indices.

    The report said direct investment in 2016 amounted to $4.5 billion, equivalent to 1.1 per cent of Gross Domestic Product (GDP). This, it added, was pitifully low by any criterion.”The short-term prospects are better for the two other components. Eurobond sales underpin other investment while the early success of the Investors’ and Exporters’ Forex window experiment explains the improvement in portfolio inflows in the third quarter, which should be repeated in subsequent quarters,” it said.

    Furthermore, the report said when the assets on the financial account (Nigerian investment offshore) in third quarter were added, all three components remained positive on a net basis. It said direct investment of $480 million, portfolio investment of $3.32 billion and other investment of $2.10 billion all made the quarter’s figures positive.

    It said the broader picture for the Balance of Payment (BoP) in third quarter of last year shows a current-account surplus of $2.29 billion and a financial-account surplus including the movement in reserves of $3.11 billion.

    “These are balanced by net errors and omissions (negative) of $5.40 billion. This is effectively the balancing item and is often revised an outflow of $5.75 billion in second quarter is now shown as $4.64 billion,” it said. It added that the item is disproportionately large, but is not a uniquely Nigeria phenomenon.

  • Foreign portfolio flow hits N696.5 billion

    FOREIGN portfolio transactions totaled N696.5 billion in the first seven months of this year as foreign investors continued to dominate transactions at the Nigerian capital market.
    The latest report on foreign portfolio investment (FPI) in Nigeria showed that speculative foreign portfolio transactions might have contributed significantly to the sustained recession at the Nigerian stock market.
    The seven-month report for the period ended July 31, 2015 indicated that foreign investors accounted for 54.21 per cent of total transaction value during the period but the larger proportion of foreign portfolio transactions were outflows rather than inflows. The preponderance of sale transactions to buy transactions by the foreign investors left Nigeria with a deficit FPI position of N28.38 billion.
    Total foreign portfolio outflow stood at N362.42 billion over the seven-month period, representing 52.04 per cent of the total foreign portfolio transactions of N696.46 billion. Total foreign inflow totaled N334.04 billion, 47.96 per cent of total foreign flow. Domestic investors accounted for N588.36 billion, 45.79 per cent of the market’s total transaction of N1.28 trillion during the seven-month period.
    the stock market in July, foreign portfolio outflow-inflow analysis showed considerable increase in FPI, but the transactions were more of sales than purchases. Total transactions in July stood at N170.83 billion, consisting of N107.47 billion from foreign investors’ transactions and N63.36 billion from domestic investors, a ratio of 62.91 per cent to 37.09 per cent. Foreign transactions however included N58.83 billion outflow and N48.64 billion inflow, indicating a deficit of N10.19 billion.
    In July, the benchmark index for the Nigerian stock market indicated average month-on-month decline of 9.79 per cent. This extended the seven-month return at the market to -13 per cent. The All Share Index (ASI), the common value-based index that tracks prices of all quoted companies on the NSE, which also serves as Nigeria’s sovereign equity index, closed July at 30,180.27 points as against 34,657.15 points recorded at the beginning of this year, representing a decline of 4,476.88 basis points or 12.92 per cent. Aggregate market value of all quoted companies also followed the same downtrend; dropping from its year’s opening value of N11.478 trillion to close July at N10.344 trillion, indicating capital gain loss of N1.13 trillion.
    The seven-month FPI report is broadly in line with the half-year report, which had shown that about 52 per cent of total foreign transaction value were divestments. Foreign investors, who dominated the Nigerian capital market, had taken out more funds than they invested in the first half as investors waited for the political transition and clear macroeconomic and monetary policy direction of the new government.
    Total foreign portfolio investment outflow in the first half stood at N303.59 billion as against inflow of N285.40 billion, representing a deficit of N18.2 billion. The half-year deficit represents a relatively larger value given the significant undervaluation of the Nigerian equities and the extended deficit Nigeria had suffered since 2013.
    Nigeria had recorded a net foreign portfolio deficit of N154.14 billion in 2014, overriding a modest positive net flow of N20.48 billion recorded in 2013. The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014. In 2013, total foreign inflow stood at N531.26 billion compared with outflow of N510.78 billion.
    The six-month report for the period ended June 30, 2015 showed that foreign portfolio investors accounted for about 53 per cent of total transaction value during the period while domestic investors accounted for 47 per cent. Total transactions stood at N1.114 trillion, with domestic investors accounting for N525 billion.
    The report however showed a month-on-month recovery in June. Total foreign inflow stood at N42.67 billion as against outflow of N26.98 billion in June, totaling N69.65 billion. Total transactions stood at N203.45 billion, with domestic investors contributing N133.80 billion. The foreign-domestic ratio stood at 34.24 per cent/65.76 per cent in June.
    In May, total foreign inflow had stood at N38 billion as against outflow of N41.77 billion, totaling N79.77 billion. Total transactions thus stood at N145.45 billion, with domestic investors accounting for N65.68 billion. Foreign investors accounted for 54.84 per cent while domestic investors accounted for 45.16 per cent.
    The market had recorded its first positive flow in April, after successive declines throughout the first quarter. Total foreign inflow rose to N54.20 billion in April as against outflow of N49.75 billion, representing a modest positive net inflow of about N4.45 billion. Total foreign transactions thus stood at N103.95 billion as against total domestic transactions of N102.91 billion during the month.
    In March, foreign portfolio outflows of N52.41 billion outpaced inflows of N50.15 billion. The first quarter had seen steady foreign portfolio deficits as investors weighed macroeconomic and political risks. Foreign outflows totaled N81.60 billion in February 2015 as against inflow of N52.35 billion, indicating a significant increase on the downtrend that started the year when foreign portfolio outflow was N51.08 billion against inflow of N48.03 billion.
    The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.
    Market analysts attributed the largely negative topsy-turvy situation at the capital market to pre-election concerns and existing concerns over the macroeconomic and monetary policy direction of the new government.
    Insecurity, poor infrastructure and inclement operating environment had also combined to shave corporate earnings, which dampened investors’ appetite.

  • Foreign portfolio investments hit N440b

    • Investors look beyond May 29

    As a result of the successful conduct of  elections and this week’s change of government, foreign investors have shown increased appetite for Nigerian portfolio investments.

    Latest update on foreign portfolio transactions at the  stock market showed that foreign investors are staking more on Nigerian equities than they are taking out.

    For the first time since the beginning of this year, the foreign portfolio investment (FPI) report by the Nigerian Stock Exchange (NSE) showed positive net foreign inflow as foreign portfolio inflow outpaced outflow. The report showed a hearty but modest reversal of the sustained downtrend that has seen a built-up of deficit foreign transactions in previous months.

    The report indicated that total foreign inflow rose to N54.20 billion in April as against outflow of N49.75 billion, representing a modest positive net inflow of about N4.45 billion. Total foreign transactions thus stood at N103.95 billion as against total domestic transactions of N102.91 billion during the month.

    The latest report represented a positive shift for the market. In March, foreign portfolio outflows of N52.41 billion outpaced inflows of N50.15 billion.

    The report used 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 investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

    The NSE report is regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active investment bankers and stockbrokers.

    The report also showed marked improvement in domestic participation in the stock market as risk-averse investors left the sidelines to drive the bargain-hunting that characterised the month. Domestic transactions, which had stood at N81.46 billion in March, added N21.45 billion to close April at N102.91 billion.

    Altogether, total foreign transactions in the past four months stood at N439.57 billion, including sales transactions of N234.84 billion and buy transactions of N204.73 billion. Domestic transactions accounted for N325.52 billion out of the cumulative transaction of N765.09 billion recorded within the four-month period.

     

     

    The first quarter had seen steady foreign portfolio deficits as investors weighed macroeconomic and political risks. Foreign outflows totaled N81.60 billion in February 2015 as against inflow of N52.35 billion, indicating a significant increase on the downtrend that started the year when foreign portfolio outflow was N51.08 billion against inflow of N48.03 billion.

    The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.

    Market analysts attributed the renewed interest in Nigerian securities to the positive spillovers of the national and state elections. On the heels of the elections, major foreign and Nigerian investment firms placed “buy” on several Nigerian stocks, a reference to the reduction in the political risk and the attractiveness of Nigerian equities, most of which had been undervalued by sustained depreciation over the past 15 months.

    Exotix, a global investment firm, described the successful conduct of the election and the emergence of Buhari as “unprecedented positive”.

    “A broadly effective voter card system, largely peaceful voting days, generally orderly announcement of results, concession of defeat and most importantly, the win for the opposition candidate, comprise a remarkable, unprecedented and positive presidential election in Nigeria,” Exotix stated.

    The firm noted that some macro level concerns which have driven Nigeria to underperform all major frontier markets have thus been removed. Exotix subsequently raised its recommendation for Nigerian stocks, especially banking and consumer goods companies.