The Nation Newspaper

Tag: investors

  • ‘Equities may decline further as investors weigh options’

    Nigerian equities may decline further this month to wrap up the losing streak in the third quarter as investors weigh options between attractive and stable returns from fixed income securities and the bargain deals created by low prices in the equities’ market.

    Against the backdrop of the mounting losses in the past two months, market pundits said they expected the market to remain largely negative, though low prices may excite investors’ appetite and stimulate subtle rallies.

    Aggregate market value of all quoted equities on the Nigerian Stock Exchange (NSE) had lost N186 billion in capital gains in August, N58 billion more than N128 billion lost in July. Average loss in August stood at 1.34 per cent compared with average loss of 0.91 per cent recorded in July.

    Market analysts said they expected the market performance to be further tempered by the increasingly anxious political climate, low corporate earnings and investors’ need for cash to meet periodic expenditures, especially school fees.

    Head, research and investment advisory, Sterling Capital Markets Limited, Mr. Sewa Wusu, said the market would likely witness another reversal this month.

    According to him, a major limiting factor which may induce a tepid market mood will be the political climate as preparations for the 2015 general elections commence in earnest. This will most likely increase the political risk rating of the country with potential caution on the part of foreign portfolio investors in their quest for equity investments.

    He, however, noted that the sustained downtrend in recent months had created attractive opportunities for investors to build up their portfolios ahead of expected rallies in the next cycle.

    “Risk tolerant investors will most likely begin to take strategic positions for the new month, given the current low and attractive market valuations. We think a buyers’ market exist for such investors with long-term horizon. Technically, the overall market index is currently within the oversold region, while most equities are trading at their lows,” Wusu said.

    Group head, research, Lead Capital Plc, Mr. Sadiq Waziri, said the returns in the fixed-income market would continue to motivate flight to money market and debt instruments.

    According to him, with the creeping inflation experienced in the past four months, it is unlikely that the Central Bank of Nigeria (CBN) would reduce the benchmark interest rates before the 2015 general elections.

    “Outlook for the secondary market in the third quarter appears mixed. Returns in the fixed income market would continue to attract institutional investors. However, good corporate results for the third quarter may likely excite the market and attract investors that may be exiting,” Waziri said.

    In a sector-by-sector review for the month, Waziri noted that the performance of the banking sector would remain low as banks’ corporate earnings are expected to fall below expectations.

    According to him, notwithstanding the reintroduction of withdrawal charges at Automated Teller Machines (ATMs), banks’ third quarter earnings would remain tepid due to regulatory headwinds.

    He added that investors would be beaming their searchlights on Oando and Seplat Petroleum Development Company to see future growth prospects.

    Waziri  noted that the consumer goods companies traditionally have always performed stronger in the second half of the year as their cost of sales are usually lower as inputs that is locally produced raw material becomes cheaper as a result of harvesting season.

    “Performance would most likely remain flat. Individual companies that are able to tackle cost of production, particularly power would likely show signs of improvement,” Waziri said on the prospects for the industrial goods sector.

    He pointed out that the insurance sector would likely remain on the downside as there are no new drivers to stimulate concerted rallies in the sector.

    Many analysts expected the market to make marginal full-year return of a single digit in 2014. For the second consecutive month, Nigerian equities had continued on the downtrend in August as investors further readjusted their portfolios on the heels of lower-than-expected earnings and increased macroeconomic risks.

    Aggregate market value of all quoted companies on the Nigerian Stock Exchange (NSE) closed August at N13.714 trillion as against the month’s opening value of N13.900 trillion. The composite index for the stock market, the All Share Index (ASI), which also doubles as Nigeria’s country index, declined from the month’s opening index of 42,097.46 points to close weekend at 41,532.31 points.

    The continuing downtrend reduced the average year-to-date gain of investors so far this year to N488 billion by the end of August compared with N674 billion in July and N802 billion in June. Indexed, average year-to-date return dwindled to 0.49 per cent, down from 1.86 per cent and 2.79 per cent in July and June respectively.

    Sectoral analysis of the pricing trend showed that the negative overall market situation in August was driven by widespread declines in share prices. With the exception of the oil and gas sector, all the group indices of the NSE declined during the period. The NSE 30 Index, which tracks the 30 most capitalised stocks at the stock market, declined by 1.61 per cent in August. The NSE Banking Index recorded average month-on-month return of -1.10 per cent while NSE Insurance Index underlined average loss of 2.18 per cent during the period. The NSE Consumer Goods Index depreciated by 2.85 per cent while NSE Industrial Goods Index indicated average return of -1.25 per cent. Meanwhile, the NSE Oil and Gas Index played the contrarian game with average gain of 2.27 per cent.

    The same scenario almost described the performance of the indices over the eight-month period. The NSE 30 Index showed eight-month return of -0.87 per cent while banking, insurance and consumer goods lost 4.28 per cent, 5.44 per cent and 6.58 per cent respectively. The oil and gas sector retained a mouthwatering gain of 41.37 per cent while industrial goods stocks recorded modest gain of 5.21 per cent over the eight-month period.

  • Investors’ Protection Fund to pay investors compensation

    Investors’ Protection Fund to pay investors compensation

    The Investors’ Protection Fund (IPF) of the Nigerian Stock Exchange (NSE) may soon begin payment of compensations to investors as the board of trustees of the scheme finalises operating groundwork to ensure smooth and continuous operations.

    A  source in the know of the activities of the IPF told The Nation that the board of IPF was rounding off operating structures and framework for the scheme and would roll out its maiden compensation soon to announce the commencement of effective operations.

    According to the source, after the approval of the IPF rules by the Securities and Exchange Commission (SEC), the board of trustees of IPF had gone back to the drawing board to ensure that it fashioned effective operating structure and framework that will sustain the scheme.

    “Any moment from now, the IPF will do something. The board is well aware of anxieties by stakeholders but it is taking its time to ensure things are done very well. After the rules, there were still some background things that needed to be done, these are being finalized now,” the source said.

    A management source at the NSE had hinted that the IPF would also look at the backlog of complaints already submitted to the Exchange as starting points for its operations in addition to new complaints.

    The IPF rules allow the NSE to submit complaints made to it to the IPF while investors can also directly petition the IPF.

    SEC had in January 2014 approved the rules for the NSE’s IPF. The rules empower the board of IPF to make payment of compensation based on the claim submitted to the NSE and verified by the NSE or claim submitted to the board of IPF and verified by it, according to relevant sections of the ISA.

    Sources in the know said some of the post-approval groundwork included the written policy on compensation, management of funds and reporting guidelines in order to ensure that the operations of the scheme are transparent and equitable to all investors.

    The IPF rules empower the board of IPF to have at anytime a written policy on the maximum compensation payable to an investor who has suffered a loss. The board can review this maximum compensation limit from time to time according to prevailing circumstances at the market.

    Compensation would be paid subject to conclusive decision of the board on the basis of evidence that the investor has a claim against a dealing member, duly applied for settlement of its claim from the dealing member; the dealing member was unable or likely to be unable to satisfy the claim within a reasonable period and the investor then, duly applied for compensation from the Fund.

    The board of IPF is also empowered to invest the funds with a view to grow the capital base of the IPF.

    Part XIV of the Investment and Securities Act 2007 requires the Exchange to establish and maintain an investors protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business as a capital market operator.

    The NSE had in 2012 inaugurated a nine-man board of trustees under the chairmanship of Mr Gamaliel Onosode. Other members of the board included managing director of Nigerian Stock Exchange (NSE), Oscar Onyema; Misan Kofi-Senaya, managing director of Central Securities Clearing System (CSCS), Mr. Kyari Bukar, Chairman, Ibadan Zonal Shareholders Association (IBZA), Chief Sola Abodurin; Fubara Anga, Edosa Kennedy Aigbekaen, Sam Onukwe and Umaru Modibo.

    The IPF rules indicates that an investor whose claim is within the maximum limit may be paid the full amount of the loss, after deduction of any amount or value of all monies or other benefits received or receivable by the investor from a source other than the Fund in reduction of the loss.

    Besides, where the board is satisfied that in principle compensation is payable but considers that immediate payment in full would not be prudent having regard to other applications for compensation, or to any uncertainty as to the amount of the investor’s overall net claim, the draft empowers the board to pay an appropriate lesser sum in final settlement or to make a payment on account.

    The board may also determine to make a payment on account or to pay a lesser sum where the investor has any prospect of recovery in respect of the claim from any third party or through an application for compensation to any other person or authority.

    Compensation would be paid subject to conclusive decision of the board on the basis of evidence that the investor has a claim against a dealing member, duly applied for settlement of its claim from the dealing member; the dealing member was unable or likely to be unable to satisfy the claim within a reasonable period and the investor then, duly applied for compensation from the Fund.

    According to the rules, an application for compensation may be rejected if it is not promptly made and in any event within the periods stipulated in the ISA or where the investor is responsible for, or has directly or indirectly profited from, events relating to the dealing member firm’s business which gave rise to the firm’s financial difficulties.

    The draft empowers the board to make payment of compensation based on the claim submitted to the NSE and verified by the NSE or claim submitted to the board of IPF and verified by it, according to relevant sections of the ISA.

    In the event of multiple claims, person who claims in a double capacity for himself and as the personal representative of a deceased investor will be treated in respect of the representative claim as if he were the deceased investor without prejudice to his own personal claim.

    Also, where a person claims for himself and as a trustee, he will be treated in respect of the latter claim as a different person.

    But where two or more persons in partnership have a joint beneficial claim, the claim will be treated as the claim of the partnership; otherwise each of them would be taken to have equal shares in the claim unless the contrary is proved to the satisfaction of the board.

    According to the rules, where an agent has a claim for one or more principals, the principal or principals are to be treated as having the claim, to the exclusion of the agent.

     

     

  • Uduaghan assures investors of quick returns

    Uduaghan assures investors of quick returns

    Governor Emmanuel Uduaghan has urged businessmen to invest in Delta State, assuring them of quick returns.

    Speaking after a tour of Vanguard’s printing press in Asaba, Uduaghan said his administration had created an enabling environment for investments to thrive.

    He said private investments would provide jobs for youths, adding: “Private investors should be encouraged to go into certain areas of investments and I am impressed with what I have seen here. The equipment is modern.”

    Vanguard’s Deputy Electrical Manager Tunde Balogun said the press had a capacity of over 100,000 print run.

  • What investors should watch out for, by Vetiva

    Investors should expect modest returns and intense portfolio reallocation as the financial markets grapple with the dynamics of the monetary tightening of the apex bank and the impending elections in 2015.

    Analysts at Vetiva Capital Management Limited said they expected the second half to be characterized by cautious trades.

    Head, research, Vetiva Capital Management, Pabina Yinkere, said the capital market would continue on cautious optimism.

    Citing the main drivers of mild returns in the first half of 2014, Yinkere noted that consolidation news within the consumer goods and industrial goods space, assets acquisitions in the oil and gas space, as well as the re-weighting of the MSCI Frontier market index provided some support to the market, amidst tepid earnings release.

    He added that although stock specific news may continue to propel specific names in the market, the run up to the 2015 general elections poses a threat to returns as broader market sentiments remain cautious.

    Consequently, Vetiva estimates 2014 return would be at best 5.0 per cent while investors are however likely to move to safer asset classes. Already with year-to-date return of 12.7 per cent, Vetiva anticipates modest gains for bonds on the back of increased local demand, particularly from the pension funds.

    Discussing the changing dynamics in the industrial goods sector, Yinkere pointed out that the strategic consolidation of Lafarge holdings across its Nigeria and South African businesses to become Lafarge Africa would have several implications for the competitive landscape of the cement industry.

    According to him, using estimated installed capacity share as a proxy for the level of competition, there is likely to be a situation where the market is dominated by two big players in 2018-Dangote Cement and Lafarge Africa.

    Vetiva’s economist, Adedayo Idowu, estimated 2014 real GDP growth rate of the Nigerian economy at 6.0 per cent, ahead of the 5.49 per cent recorded in 2013.

    According to him, with the political risks ahead of the 2015 general elections, Vetiva expects GDP growth to be driven largely by the industry sector at 25 per cent of GDP, as current government focus on economy diversification creates an upside for growth.

    Going on to other economic indicators, Vetiva notes inflation and exchange rate performance would be the main determinants of monetary policy in the months ahead. The base case seems to suggest no further monetary tightening, with the Monetary Policy Rate (MPR) unchanged at 12 per cent over the second half of 2014; although in the scenario risks to prices materialize, the MPR could be increased by as much as 100 basis points.

    In his remarks, financials analyst Olalekan Olabode predicted a better second half noting that banks’ top-line performance is likely be supported by loan growth and the recent reversal of ATM charges. He however added that charges by the Asset Management Corporation of Nigeria (AMCON) would continue to be significant, accounting for an average of about 10 per cent of operating expenses for Vetiva’s coverage banks.

    He pointed out that while the banking sector lagged behind the market in the first half largely due to unimpressive results, investors should anticipate better results in the second half as the liquidity support from capital raising boosts loan growth and also supports Capital Adequacy Ratio (CAR).

    On the contrary, Consumer Goods Analyst, Efemena Esalomi said that optimism for volume and earnings growth in the consumer goods space has been tainted by numerous and sustained challenges to consumer demand and cost management. Notwithstanding, Vetiva expects investors would rebalance their portfolios to more defensive stocks even as they predict strong earnings in the period.

  • Foreign investors show increased appetites for Nigerian equities

    Foreign investors show increased appetites for Nigerian equities

    For the first time since the beginning of this year, foreign investors are staking more on Nigerian equities than they are taking out. Latest update on foreign portfolio transactions in the Nigerian equities showed that they have regained the lead as the larger block of investors from the domestic investors with about 29 per cent increase in total transactions by foreign investors.

    The foreign portfolio investment (FPI) report by the Nigerian Stock Exchange (NSE) showed positive net foreign inflow of about N20 billion in June this year, reversing the downtrend that has seen a built-up of deficit foreign transactions over the five previous months.

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

    Total foreign inflow rose to N68.78 billion as against decline in outflow to N49.22 billion in June, putting the total foreign transactions to N118 billion. Total domestic transactions stood at N107.51 billion. The proportion of foreign investors’ turnover to Nigerian investors’ turnover thus stood at 52.32 per cent to 47.68 per cent.

    A six-month report for the first half ended June 30, showed that foreign investors accounted for 60.84 per cent of total turnover value in the Nigerian stock market as against 39.16 per cent recorded by Nigerian investors.

    Total foreign transactions stood at N705.15 billion as against N453.91 billion by Nigerian investors. Total transactions during the period thus stood at N1.159 trillion. However, there were more outflows than inflows with net foreign deficit of more than N100 billion. Total foreign outflows stood at N402.63 billion as against foreign inflows of N302.52 billion.

    Earlier reports had indicated general decline in foreign investments as the overall trend continued to show net deficit with outflows more than inflows. While foreign participation declined from 75.25 per cent in April to 45.56 per cent in May, domestic participation more than doubled from 24.75 per cent to 54 .44 per cent.

    The five-month report for the period ended May 31, 2014 detailed month-on-month as well as periodic transactions by both foreign investors and Nigerian investors.

    According to the report, the quantity of total foreign transactions dropped by about N47 billion in May to N91.9 billion, its lowest position in four months. Besides, the inflow- the buy side of the foreign transactions, declined by about N24 billion from this year’s high of N65.1 billion in April to N41.3 billion in May, its lowest position in three months.

    Total transactions trended to its high of N201.61 billion in May, driven largely by significant increase in transactions by Nigerian investors, which rose from N45.64 billion in April to N109.75 billion in May.

    Five-month cumulative analysis however still underlined the dominance of foreign investors, who accounted for about 63 per cent of the turnover on the NSE during the period. Aggregate turnover during the period stood at N933.55 billion, consisting of N587.15 billion from foreign investors and N353.41 billion from Nigerian investors.

    Buy-sell analysis of the foreign transactions showed that foreign investors had taken out more than they invested during the period. Foreign outflows stood at N353.41 billion within the period as against inflows of N233.74 billion.

    In April, foreign investors traded N138.79 billion worth of shares including sales transactions of N73.73 billion and buy transactions of N65.06 billion. Total domestic transactions stood at N45.64 billion. Total transactions during the month stood at N184.43 billion.

    The foreign sale-buy trend in April followed the same trend in recent months, although the momentum of buy transactions appeared to be picking up. In the first quarter, nearly two-thirds of foreign portfolio transactions were on the sell side.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that Nigerian investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    Month-on-month analysis showed that there was increase in the momentum of foreign transactions in March 2014, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totaling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March this year contrasted sharply with the situation in March 2013 when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January this year and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January to N198.70 billion in February , foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

    Foreign portfolio outflows stood at N103.53 billion in February as against foreign inflows of N32.75 billion. These indicated that foreign investors accounted for 68.59 per cent of total transactions during the period.  This contrasted sharply with the situation in similar earnings season of February 2013 when foreign investors had more inflows at N39.34 billion as against outflows of N36.63 billion.

    Total foreign outflow had stood at N50.14 billion in January as against inflow of N39.53 billion during the period, bringing total foreign transactions to N89.67 billion.

  • NIDF pays investors N60.71 dividend

    Afrinvest Asset Management Limited, the fund managers of the Nigerian International Debt Fund (NIDF),  a listed collective investment scheme on the Nigerian Stock Exchange (NSE), has started payment of interim dividend of N60.71 per note to investors. The N60.71 coupon per note is well above the initial estimated dividend payment of N36.00 per note.

    In a statement, the fund manager stated that based on the number of qualified notes on the register of the NIDF as at the closure date of July 29, 2014, a total of N44.17 million would be distributed to all note holders at N60.71 per note.

    “Dividends have become an important factor for investors to consider and, at Afrinvest, we are committed to providing value for our clients, helping them achieve their investment objectives”, said Ike Chioke, Managing Director of Afrinvest West Africa Limited, the parent company of the Fund Manager.

    The Nigeria International Debt Fund invests in the domestic and international debt instruments of the Federal Government of Nigeria as well as those of the 36 States.

    Chioke said the NIDF offers investors safety, capital preservation, steady returns, diversification and value, and has a consistent dividend history making it quite attractive for both individual and institutional investors such as Pension Fund Administrators (PFAs), insurance companies, asset managers and gratuity funds.

  • Investors await GTBank, Access Bank, Dangote Cement results

    A recent directive on exclusion of non-distributive regulatory reserve and other reserves in the computation of the capital base of banks and discount houses could quicken the pace of fund raising by banks and other financial institutions.

    Many banks have been raising funds in recent period. Diamond Bank is currently raising N50.4 billion new equity funds. Unity Bank had recently closed application list for a combined new equity issue of N39 billion. Wema Bank and Sterling Bank had earlier raised new equity funds.

    The Central Bank of Nigeria (CBN) last week in a circular to all banks and discount houses highlighted details on the exclusion of non-distributable regulatory reserves and other reserves in the computation of regulatory capital of banks and discount houses.

    The highlights of the circular indicated that the regulatory risk reserve will be excluded from the regulatory capital when computing the  Capital Adequacy Ratio (CAR), collective impairment on loans and receivables and other financial assets will henceforth not form part of Tier-2 capital, other comprehensive income reserves will be recognised as part of Tier-2 capital but limited to 33.3 per cent of total Tier-1 capital and while unaudited other comprehensive income gains will not be recognised as part of capital, unaudited other comprehensive income will be deducted from total qualifying capital.

    The circular, which implementation started immediately, was part of efforts to ensure more prudent assessment of the regulatory capital of Nigerian banks and in line with global efforts aimed at raising the quality and loss absorbency of the capital base of banks.

    Capital market pundits said the new policy would significantly impact on the capital adequacy ratios of banks and might spur them to seek additional equity funds to bolster their capital base.

    Increased fund raising by banks, which represent the most active block in the capital market and control nearly one-fifth of total market capitalisation at the Nigerian Stock Exchange (NSE), is expected to enliven the primary market.

    Analysts at Afrinvest (West Africa) noted that the new policy would further exert pressure on the banks’ capital adequacy ratios in the third quarter of 2014, when the policy will be used in calculating third quarter earnings and financial statements.

    The capital adequacy ratios of tier 1 banks had declined to 20.0 per cent by the end of 2013 as against 23.3 per cent in 2012.

    Analysts pointed out that the regulatory risk reserves accommodates the difference between the allowance for impairment losses on loans and advances based on CBN’s prudential guidelines compared with the loss incurred model used in calculating impairment charges under International Financial Reporting Standards (IFRS).

    A review of the banks’ capital adequacy ratios (CAR) as at first half 2014 showed that Ecobank Transnational Incorporated (ETI) has the lowest CAR at 16.0 per cent, at par with the 16.0 per cent regulatory requirement for systemically important banks (SIBs). FBN Holdings has 17.6 per cent, slightly above the requirement for SIBs. Among tier 2 banks, Diamond Bank has the lowest CAR with 17.3 per cent, which underlined the strategic importance of the bank’s ongoing rights issue.

    “The recently introduced 33.3 per cent Tier-2 ceiling of total Tier-1 capital, places a restriction on some of the banks that intend to raise further Tier-2 capital in the second half of 2014, hence, they may be forced to explore the Tier-1 capital’s equity raise option,” Afrinvest stated.

    Analysts noted that the new policy would increase confidence of foreign banks in Nigerian banks, based on the stringent capital requirement, which is in tandem with global counterparts, noting that in the light of Nigerian banks’ exposure to the Eurobond market, the prospects of volatility or depreciation in foreign exchange can be significantly absorbed.

    The new CBN policy comes in the wake of impending implementation of the Basel II by the Nigerian financial services authorities. The Nation had recently reported that Nigerian banks might raise some N400 billion in the current capital raising phase to strengthen their capital base in view of the impending implementation of the Basel II.

    Basel II seeks to strengthen banks’ risk and capital management through three main areas, otherwise known as pillars. The first pillar deals with minimum capital requirements, the second pillar deals with supervisory review process while the third pillar deals with processes relating to market discipline. The pillars generally ensure that the greater the risk to which a bank is exposed, the greater the amount of capital and required supervisory framework.

    After initial delay, Nigeria has set October 31, 2014 as the cut-over date for the implementation of Basel II.

    Market sources had noted that while the average capital adequacy ratio in the Nigerian banking industry is currently high and most banks are above regulatory benchmark, banks might need to support their adequacy ratios, which are expected to fall after the cut-over.

    Several analysts’ reviews on the banking sector have outlined capital raising as a major theme for the Nigerian banking sector citing new regulations and emerging business opportunities.

  • Protecting investors against market failures

    Protecting investors against market failures

    Investors are risk takers.They lose or profit from their risks. While investors need no protection for the gains and losses from their investment decisions, they could also suffer from risks due to failures in market architecture and operators. Capital Market Editor Taofik Salako reports that ongoing efforts to kick-start investors’ protection funds at the capital market would protect  investors against operational and professional failures

    The capital market primarily seeks to protect investors by enforcing full, adequate and factual disclosures; bringing all the shades and hues of a prospective investment to the table for investors to make their judgments. Most part of the legal framework, rules and regulations and operating system at the market centre on this quest for full and adequate disclosures.

    These laws, rules and regulations mostly place the burden of disclosures on the issuers-the originators and sponsors of securities. As such, when issues of investors’ protection arise, many look at the direction of the issuers – the quoted companies that issue shares or bonds, governments that issue bonds and institutions that float common investment vehicles.

    But sometimes, the unsung risk is the failure of the market itself – operational and professional failures. The risk and loss here are neither due to investors’ judgments nor to their negligence, rather due to frauds, negligence and other threats on the part of registered operators and their employees or the terminal threat to the continued survival of an operator.

    The dregs of illiquidity and fraud

    The risks of market failures and operators’ infidelity are legitimate concerns at the stock market. There are large number of inactive and illiquid stockbroking firms and several complaints that border on frauds perpetrated by struggling stockbroking firms and their employees. Many reports by the NSE and SEC have identified low liquidity as major reason for most frauds perpetrated on investors’ accounts. In the throes of the recent recession and its hangovers, many capital market operators that had lost their funds had resorted to fiddling with investors’ funds including sale and non-remittance of sales’ proceeds. The NSE had recently commenced a process to determine the propriety of dealing licence of 53 stockbroking firms, a development that may lead to withdrawal of operating licence of erring stockbroking firms. Most of the firms had earlier been suspended and were inactive.

    Besides, both NSE and SEC had indicted and expelled several capital market operators. At the last count, there were not less than 38 persons under life ban from all capital market activities while some 50 operators were under various suspension terms. Several of the cases highlighted the challenges of professional and institutional failures and underscored the importance of the IPF. According to the commission, the banned persons were guilty of frauds ranging from failure to purchase shares duly paid for, illegal sale of client’s shares without mandate, misappropriation of investors’ funds, financial misstatements and non-remittance of sale proceeds.

    In one of the cases, a member was banned for life for several gross abuse of market and frauds including failure to pay capital and interest on investments as fund managers, failure to purchase shares paid for by clients, failure to verify and lodge shares as mandated by the clients, failure to carry out various instructions by clients and regulators, non-remittance of sale proceeds and mismanagement of dividends and bonuses in respect of the un-purchased stocks.

    Some of the earliest sanctions included former staff of the Central Securities and Clearing System (CSCS) who connived with some stockbrokers to fraudulently clone and sell shares of a multinational conglomerate. CSCS is a subsidiary of the NSE and the only clearing, settlement and depository agent for the Nigerian capital market.  In another instance, two individuals were placed under indefinite ban due to their failure to disclose material facts of indebtedness and negligent auditing of a petroleum-marketing company. In another case, a member was sentenced to life ban for selling the shares of a deceased worth N200 million without authorisation or recourse to the administrators of the estate of the deceased.

    Besides, the Chartered Institute of Stockbrokers (CIS), the statutory self-regulatory organisation that controls the practice of stockbroking in Nigeria, has delisted and withdrawn membership of not less than three stockbrokers over the last 12 months. The CIS Disciplinary Tribunal, the disciplinary and adjudicating arm of the institute, has been quiet active. The tribunal has continued to show the possibility of intended fraud among some unscrupulous operators.

    In a case resolved this year, a stockbroker had collected N320, 000 from two persons under the pretence that he had shares of Friesland Campina Wamco Nigeria to sell when he knew in actual fact he had no such shares to sell. While the stockbroker was sanctioned and made to buy the shares, with all entitlements, to the investors, the case underlined the risks faced by investors.

    Mechanisms for investors’ protection

    The Investment and Securities Act (ISA) 2007 generally requires the Securities and Exchange Commission and all securities exchanges and capital trade points to individually establish and maintain an investors’ protection fund (IPF) to compensate investors with genuine claims of pecuniary loss. Specifically, Part XIV of ISA demands for the establishment and maintenance of an investors protection fund to compensate investors with genuine claims of pecuniary loss against dealing member firms resulting from insolvency, bankruptcy or negligence of a dealing member firm of a securities exchange or capital trade points; and defalcation committed by a dealing member firm or any of its directors, officers, employees or representatives in relation to securities, money or any property entrusted to, or received by the dealing member firm in its course of business as a capital market operator.

    The ISA also requires SEC to also establish “a nationwide trust scheme to compensate investors whose losses are not covered under the investors protection funds administered by securities exchanges and capital trade points”. This additional protection ensures omnibus coverage for non-investment-decision related losses. Besides SEC and NSE, the two most prominent capital market regulators, the provisions of the ISA explicitly implies that other exchanges such as the Abuja Securities and Commodity Exchange (ASCE), NASD Plc and FMDQ OTC Plc would also have to establish separate investors’ protection fund. The NSE has already established its IPF, after receiving SEC’s approval for its operating rules. The board of SEC has also approved the establishment of a national investors’ protection fund (NIPF) and relevant operating rules.

    One side of the coverage

    The NSE had in 2012 inaugurated a nine-man board of trustees under the chairmanship of Mr Gamaliel Onosode. Other members of the board included chief executive officer of Nigerian Stock Exchange (NSE), Oscar Onyema; Misan Kofi-Senaya, managing director of Central Securities Clearing System (CSCS), Mr. Kyari Bukar, chairman, Ibadan Zonal Shareholders Association (IBZA), Chief Sola Abodurin; Fubara Anga, Edosa Kennedy Aigbekaen, Sam Onukwe and Umaru Modibo. The rules and regulations for the NSE’s IPF were however approved earlier this year by SEC.

    Under the NSE’s IPF rules, compensation would be paid subject to conclusive decision of the board on the basis of evidence that the investor has a claim against a dealing member, duly applied for settlement of its claim from the dealing member; the dealing member was unable or likely to be unable to satisfy the claim within a reasonable period and the investor then, duly applied for compensation from the Fund. However, the IPF rules empower the board of IPF to have at anytime a written policy on the maximum compensation payable to an investor who has suffered a loss. The board can review this maximum compensation limit from time to time according to prevailing circumstances at the market.

    In order to avoid multiple compensations for the same infraction, the rules set out conditions and treatments of various payments. For instance, an investor whose claim is within the maximum limit may be paid the full amount of the loss, after deduction of any amount or value of all monies or other benefits received or receivable by the investor from a source other than the Fund in reduction of the loss.

    But where the board is satisfied that in principle compensation is payable but considers that immediate payment in full would not be prudent having regard to other applications for compensation, or to any uncertainty as to the amount of the investor’s overall net claim, the rules empower the board to pay an appropriate lesser sum in final settlement or to make a payment on account. Besides, IPF may also determine to make a payment on account or to pay a lesser sum where the investor has any prospect of recovery in respect of the claim from any third party or through an application for compensation to any other person or authority.

    In the event of multiple claims, person who claims in a double capacity for himself and as the personal representative of a deceased investor will be treated in respect of the representative claim as if he were the deceased investor without prejudice to his own personal claim. Also, where a person claims for himself and as a trustee, he will be treated in respect of the latter claim as a different person.

    But where two or more persons in partnership have a joint beneficial claim, the claim will be treated as the claim of the partnership; otherwise each of them would be taken to have equal shares in the claim unless the contrary is proved to the satisfaction of the board of IPF. Where an agent has a claim for one or more principals, the principal or principals are to be treated as having the claim, to the exclusion of the agent.

    The NSE’s IPF also takes into consideration the possibility that investors may be partly responsible for their losses. According to the operating rules, the IPF may determine to reduce the compensation which would otherwise be payable to an investor in circumstances where it is satisfied that the investor is partly to blame for the loss which he has suffered. Also, an application for compensation may be rejected if it is not promptly made and in any event within the periods stipulated in the ISA or where the investor is responsible for, or has directly or indirectly profited from, events relating to the dealing member firm’s business which gave rise to the firm’s financial difficulties.

    National cover for investors

    Unlike the NSE’s IPF, which is restricted to institutional and individual failures of its dealing members and their employees, SEC’s national investors’ protection fund (NIPF) provides a broader coverage against losses recorded due to activities of other capital market operators, who are not members of the Exchange. The legal framework that established the SEC’s NIPF, which was released recently, has many similar provisions with the NSE’s IPF and several unique guidelines that set it aside as a scheme under the apex capital market regulator. Broadly, the aim and beneficiaries of the NIPF and IPF are the same.

    However, the NIPF will apply only to defalcations by insolvent or bankrupt capital market operators not dealing members of Securities Exchange or Capital Trade Points. In other words, the NIPF will be for the purpose of compensating investors whose losses are not covered under the Investors’ Protection Funds being administered by Securities Exchanges and Capital Trade Points.

    SEC is expected to provide the initial take-off grant for the NIPF. It will subsequently generate funds through grants, subventions, donations and annual contributions to be made by all capital market operators not subject to contribute to the IPF of Securities Exchanges and Capital Trade Points. SEC will determine the applicable annual contribution. The board of the NIPF is also empowered to obtain loans, subject to approval of SEC. Also, the NIPF can generate funding through assets, properties or cash that shall be realised from liquidated operators after compensation to investors and proceeds from investment of its resources.

    While the NSE’s IPF is silent on the initial ceiling for compensation, the NIPF capped the maximum amount payable to an investor who has suffered loss at N200, 000 or its equivalent in form of shares or units, provided that where the amount of loss is lesser, the investor shall be paid the calculated amount of loss. The NIPF however provides that the amount of compensation may be reviewed from time to time as approved by the board of the fund.

    In what may amount to subtle attempt to remove possible threats of litigations from aggrieved investors, the NIPF rules stated that “the Fund is not under any obligation to pay compensation to an investor” while “any claim prior to the commencement of these rules shall not be covered by the Fund”. The NIPF mostly shared the same views with the IPF in the areas of multiple claims and compensations, inadequate fund as well as dismissal of claims from investors who participated in the wrongful act of the operator.

    More importantly, the NIPF will also not apply to losses arising from transactions not regulated by the commission. These unregulated transactions include private placement and private equity investment.

    Communication Adviser, Securities and Exchange Commission (SEC) Mazi Obi Adindu said the NIPF has been designed as a strong hedge against loss of value to investors. He said with the approval of the rules and guidelines for the NIPF, the commission would make earnest efforts to put in place other structures to facilitate effective take-off of the scheme.

    Applying for compensations

    But for investors, getting compensations will not be that straightforward and stress-free. Hopes of compensation start from basic understanding of the market rules and possession of relevant documentations. Both the SEC and NSE’s investors’ protection funds outline clear application guidelines while the general bodies of the rules and regulations for the funds show that only diligent investors might get compensations.

    According to the SEC’s NIPF, investor must submit application for compensation within 12 months after the investor became aware or ought reasonably to have become aware of the status of the investments. The investor is also expected to back up his claims with relevant evidence. The board of NIPF is expected to set up a ‘Review Committee’ which shall be charged with the responsibilities of reviewing the claims of investors and making recommendations to the board. The decision of the board is final on compensation.

    While the NSE’s IPF was silent on the timeline, the operating framework only empowers the board to make payment of compensation based on the claim submitted to the NSE and verified by the NSE or claim submitted to the board of IPF and verified by it, according to relevant sections of the ISA.

    These imply that only investors with transactional evidence such as receipt, deposit slip, mandate forms, shareholding statements, client-membership forms and other transactional documents that validly establish the transaction between the investor and the market operator on one hand and simultaneously prove that the investor had suffered a loss due to no fault of his.

    Onosode said the IPF would only be guided by facts and figures at every time. A doyen and one of the oldest stockbrokers, Onosode knows the rules and can shift the facts from facades of emotions and negligence, which have no place in the marketplace. According to him, the fund would not be subject to abuse and it would not encourage any kind of substandard behavior.

    Onyema said provision of clear guidelines for compensation of legitimate claimants and modernisation of the operations of the IPF would help to reduce the hassles and enhance confidence.

    Beyond compensation to self protection

    The spirit, letters and realities of the IPFs underline the fact that the compensation may not be enough to recompense investors. These underscore the need for investors’ education as the bulwark of defence against market failures. Already, the NSE’s IPF is reported to have a bagful of claims and requests for compensations. At the last count, not less than 600 claims and requests have been submitted to the board of trustees of the IPF. With IPF’s fund recently estimated below N1 billion, the mounting claims for compensations will not only subject the board to rigorous tests of the substantiality of the claims but also the degree of compensation based on the existing capital base of the fund.

    Immediate past president, Chartered Institute of Stockbrokers (CIS), Mr. Ariyo Olushekun, said the IPF may not be able to cover all cases of market abuses and fraudulent practices against investors given the size and frequency of market infractions and the fund.

    According to him, the IPF might not be enough to protect investors on a sustainable basis because the incidence of market abuses and fraudulent malpractices in the past has overwhelmed the existing fund available. The challenge before the board of trustees of the IPF is to manage and grow the fund in a way to meet its objectives.

    Olushekun said the best and most effective way to protect investors is to institute and enforce proactive measures that enhance market integrity and forestall abuses. “The importance of effective regulation in the capital market cannot be overemphasized. Regulations must be designed to address current market realities and by this, they must be up-to-date and relevant.  The importance of regulation and enforcement of rules is paramount in investors protection and in gaining investors confidence,” Olushekun said.

    He outlined that certification, continuous training and effective disciplinary measures of the CIS have proved to be major contributors to protection of investors as stockbrokers are usually wary of infringing on codes of ethics and professional guidelines set by CIS.

    According to him, stockbrokers help to protect investors from vagaries of the market and possible abuses by giving quality investment advice that takes into consideration investor’s investment objective, the risk-return profile of investment opportunities and the capacity of the investor to undertake the risk.

    Executive Director, Investment One Financial Services Mrs Abimbola Afolabi-Ajayi said both the regulators and operators must make concerted efforts on investment education to forestall instances of abuses and ensure that investors play in the market according to their objectives.

     

  • Investors warn against ‘hasty’ sale of Mainstreet Bank

    Investors warn against ‘hasty’ sale of Mainstreet Bank

    Some stakeholders are criticising the steps taken by the Assets Management Corporation of Nigeria (AMCON) to sell Mainstreet Bank Limited, one of the bridged banks under its ownership.

    The steps are hasty, according to some of those interested in the process, as well as stakeholders in the defunct Afribank from where Mainstreet Bank took its root.

    The opposition is specifically against the one-week notice given by AMCON to those who are interested in bidding for the bank to express their interest. The notice is seen to be grossly inadequate for any meaningful due diligence to be done on the bank.

    In advertorials in the media last week, AMCON gave a week’s notice to interested parties in the acquisition of the bank to submit their Expression Of Interest (EOI) not later than May 16.

    To the parties, who asked not to be named so as not to jeopardise their interest, the “rush” by AMCON to push Mainstreet Bank through the divestment process without recognising the enormous work that needs to be done to ensure fairness and transparency in the eventual bid process, put a question mark on AMCON’s intention.

    The potential buyers said while they were in agreement with AMCON on the need to move ownership of the bridged banks from the domain of public ownership and government control to the private sector, the process should be well “streamlined”, well publicised and allowed enough time to be examined by all interested parties, and should never be an issue that should be,as it were, rushed, as though there is more to it than meets the eye”.

    “It is a welcome development that these banks are eventually finding their way into the private sector domain where they should be in the first place, but we insist that the process should be meticulous and not rushed, as no purpose will be served if the divestment is not transparent, or seen to be so,” they said, adding that  one week is grossly inadequate for a thorough job to be done and for every participant to be acquainted with the requirement to meet the rigorous process in the evaluation “except they want us to go home with the impression that this is a predetermined exercise.”

    The groups who are insisting that every interested party in the acquisition of Mainstreet Bank  should be given equal opportunity,  cautioned that AMCON, having midwifed the banking transformation process successfully thus far, should not rush into taking  decisions or actions that would appear in the eyes of stakeholders to be pursuing  “a hidden agenda, surreptitiously”.

    While  maintaining that the bridged banks, namely, Mainstreet Bank Limited, Enterprise Bank Limited and Keystone Bank Limited are national assets, to which every  Nigerian has a claim, they insist that  all the processes leading to their sale, or privatisation at any material time must be done in such a manner that no one is seen to be excluded, either by way of withholding information, or restricting access to the process by not allowing sufficient time for qualified people to participate therein.

    The groups and stakeholders, said it would amount to disservice and criminal acquiescence for AMCON to ignore the concerns of Nigerians by going ahead with the process of selling Mainstreet Bank Limited or any of the other two when they are eventually brought to the market without incorporating the interest of other potential buyers (even if a single buyer)  by ignoring the call for elongation of the time allotted to submit EOI and proceed with the divestment as contained in the AMCON’s  advertisement.

    They drew AMCON’s attention to the mood of the nation, regarding the kidnapping of “our daughters” by Boko Haram, stressing that no feeling of any one Nigerian should be further dampened by actions of those entrusted, not only to protect, but defend their interests.

    Taking cognisance of the transition in the Central Bank of Nigeria (CBN), the groups said much confidence would be derived if AMCON were to tarry a while and give the CBN Governor-designate, Godwin Emefiele, and his team the benefit of introspection, rather than rush the process as though any harm will be done if the divestment is not accomplished today and foist upon the new CBN Governor a fait accompli.

    They recalled the lingering and unresolved labour issues that have trailed the acquisition of some of the sold or acquired banks, stating that none of the bridged banks being prepared for privatisation at this time should be made to suffer the same fate.

    They said  labour matters are intractable and should be properly addressed to avoid any backlash.

    In its advertisement calling for Expression Of Interest (EOI), AMCON said interested buyers should provide information in respect of the vehicle or entity they intend to use in the acquisition, among others, with evidence of registration with the Corporate Affairs Commission, ownership of the acquiring entity, identifying all shareholders with five per cent , or more stake, and strategic rationale for the acquisition of Mainstreet Bank.

    In addition, interested firms are expected to provide relevant financial services industry where they have acquired cognate experience and demonstrable evidence of ability to manage a bank of the stature of Mainstreet, as well as evidence of financial capacity.

    In the case of a consortium, AMCON required that the parties must provide evidence of alliance or partnership, clearly indicating the leader of the group that is authorised to submit the EOI, adding that full names of contact persons, e-mail addresses as well as any relevant information that demonstrates credibility and eligibility for the transaction are required.

  • Foreign investors selling more than investing, says NSE

    Foreign investors selling more than investing, says NSE

    • Divestments outpace investments in Q1

    Nearly two-thirds of  oreign portfolio transactions in the first quarter were on the sell side, as foreign investors continued to be cautious ofNigerian equities.

    In its latest foreign portfolio investment (FPI) report, the Nigerian Stock Exchange (NSE) at the weekend indicated that there appeared to be a reversal in foreign investors’ sentiments in the past few months compared with the corresponding period of last year.

    While foreign investors  dominate, by value, the  stock market, most transactions in the past few months have been on the sell side. The first quarter report for the period ended March 31, last year underlined the sustained but modest downtrend at the Nigerian stock market so far this year. The benchmark index at the NSE, the All Share Index (ASI), opens today with a negative average year-to-date return of -6.71 per cent.

    According to the NSE, total foreign outflows stood at N229.03 billion in the first quarter, representing some 64.2 per cent of total foreign transactions during the period. Total foreign inflows stood at N127.41 billion. Altogether, foreign investors’ deals accounted for N356.50 billion during the three-month period, more than 65.11 per cent of total transactions of N547.51 billion. This indicated that indigenous investors accounted for N191.01 billion, 34.89 per cent of total transactions, during the period.

    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 the country as it coordinates data from nearly all active investment bankers and stockbrokers.

    “The rise in the foreign outflow is attributed to so many factors some of which are; uncertainty over the value of the naira, declining foreign reserve, drop in oil production over pipeline vandalism, insecurity, quantitative easing in USA, and the need for fund for political campaigns and the fear of post-election crises have mounted a divestment pressure on some investors,” Anetor Mustard of Interstate Securities Limited said.

    Monthly analysis showed that there was increase in the momentum of foreign transactions in March, this year, with increases in both sell and buy orders. However, the downtrend continued to dominate transactions. Total foreign outflow in March 2014 stood at N75.42 billion as against inflow of N55.13 billion, totalling N130.55 billion. Foreign investors accounted for 78.25 per cent of total transactions-foreign and domestic, of N166.84 billion in March 2014.

    The flow of investments in March, this year contrasted sharply with the situation in March, last year when there were more inflows than outflows. Total foreign inflows totaled 53 per cent of total foreign transactions in March 2013. Total foreign transactions stood at N80.14 billion in March 2013, consisting of inflow of N43.13 billion and outflow of N37.01 billion.

    The NSE report noted the “significant increase” in foreign transactions, driven by sales, since the beginning of this year as against decline in domestic participation.

    Month-on-month, the outflows in February are about 107 per cent higher compared to January 2014 and about 183 per cent compared to February 2013. While total transactions at the NSE increased from N181.97 billion in January 2014 to N198.70 billion in February 2014, foreign outflows accounted for the increased tempo of activities and the higher proportion of foreign participation to local participation.

    Foreign portfolio outflows stood at N103.53 billion in February 2014 as against foreign inflows of N32.75 billion. These indicated that foreign investors accounted for 68.59 per cent of total transactions during the period.  This contrasted sharply with the situation in similar earnings season of February 2013 when foreign investors had more inflows at N39.34 billion as against outflows of N36.63 billion.

    Total foreign outflow had stood at N50.14 billion in January 2014 as against inflow of N39.53 billion during the period, bringing total foreign transactions to N89.67 billion. In comparable period of January 2013, foreign inflow was higher at N40.96 billion against outflow of N20.50 billion.

    Recent reports have continued to highlight increased foreign participation, though negative. Foreign investors accounted for 49.28 per cent of total transaction value of N181.97 billion in January 2014 as against 36.89 per cent of total transactions of N166.60 billion in January 2013 and 48.91 per cent of total transactions of N142.24 billion in December 2013.

    Portfolio flow analysis in recent period had shown a consistent trading pattern in foreign transactions. While foreign investors flowed in more funds than they took out in the first half of 2013, they have since been taking more money out than they invested since the beginning of the second half of 2013.

    Month-on-month analysis showed that total foreign transactions closed December 2013 at N69.57 billion, consisting of inflow of N32.40 billion and outflow of N37.17 billion. Total foreign transactions rose to N88.89 billion in November, including inflow of N42.68 billion and outflow of N46.21 billion. These had closed October at N82.33 billion including inflow of N39.45 billion and outflow of N42.88 billion.

    In September, total foreign inflow was N26.14 billion as against outflow of N27.88 billion, bringing total foreign transactions to N54.02 billion. Total transactions at the stock market during the month stood at N108.19 billion, out of which domestic investors contributed N54.17 billion or 50.07 per cent.

    In August, foreign inflow had stood at N31.12 billion as against outflow of N39.76 billion. Total foreign transactions thus stood at N70.88 billion, 52.26 per cent of the total turnover of N135.63 billion recorded for the month.

    Foreign investors had took out nearly a double of every penny they invested in the Nigerian stock market in July, unusually high disparity between foreign portfolio inflow and outflow, which led to significant decline in net foreign investment in the Nigerian stock market.

    The seventh month report for July 2013 had indicated that total foreign inflow stood at N31.81 billion as against outflow of N61.90 billion in July, showing the widest divergence between inflow and outflow so far this year.

    Total foreign inflow had risen to N90.15 billion while outflow stood at N60.09 billion as total foreign transactions increased to N150.24 billion in June.

    Foreign investors had accounted for 36.89 per cent, 39.65 per cent, 52.78 per cent, 64.48 per cent, 48.68 per cent and 51.13 per cent in January, February, March, April, May and June respectively.

    Portfolio transactions by foreign investors totaled N61.46 billion, N75.97 billion, N80.14 billion, N122.97 billion, N91.86 billion and N150.24 billion in January, February, March, April, May and June respectively.

    Foreign investors staked about N4.08 trillion on quoted shares on the NSE between 2007 and 2012. Foreign investors had gradually and consecutively increased their investments in Nigerian equities from about 15 per cent of total market turnover in 2007 all through till a high of about 67 per cent in 2011.

    Foreign portfolio investors concluded deals worth about N2 trillion on publicly quoted Nigerian equities between 2012 and 2013. Value of foreign portfolio transactions on the NSE increased by 29 per cent in 2013 as domestic investors showed keener interests in listed equities.

    Value of foreign portfolio transactions increased from N808.4 billion in 2012 to N1.04 trillion in 2013. In both years, Nigeria retained net inflow from foreign investors. However, net inflow dropped considerably from N94.4 billion in 2012 to N20.48 billion in 2013, reflecting the speculative and edgy nature of foreign portfolios during the year.

    Foreign investors had accounted for about 61.4 per cent of total turnover on the NSE in 2012 while domestic investors accounted for 38.6 per cent. However, domestic investors stepped up their participation with 49.2 per cent in 2013 while foreign investors slowed down to 50.8 per cent. Foreign portfolios were the main drivers of transactions on the NSE between 2011 and 2012, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and 2012.

    Total foreign inflow increased from N451.40 billion in 2012 to N531.26 billion in 2013 just as foreign outflow correspondingly increased from N357 billion in 2012 to N510.78 billion in 2013.

    Foreign investors staked about N4.08 trillion on quoted shares on the NSE between 2007 and 2012. Foreign investors had gradually and consecutively increased their investments in Nigerian equities from about 15 per cent of total market turnover in 2007 all through till a high of about 67 per cent in 2011.

    Foreign portfolio transactions increased from N615.6 billion in 2007 to N787.4 billion in 2008. These trimmed down to N424.6 billion in 2009 before rising consecutively to N577.3 billion and N847.9 billion in 2010 and 2011 respectively. Foreign portfolio trades stood at N808.4 billion in 2012. With these, the two-way flow of foreign portfolio investments showed that while foreign investors flowed in about N2.01 trillion during the period, they equally took away about N2.17 trillion.