•Dominate market at 51%
Foreign investors gradually built up their stakes on Nigerian equities from about 37 per cent of total transactions at the stock market in January 2013 to achieve dominance over 11-month period with 50.94 per cent by the end of November 2013.
The latest report on the foreign portfolio investment flow by the Nigerian Stock Exchange (NSE) indicated that foreign investors accounted for N972.5 billion out of total transactions of about N1.91 trillion during the 11-month period, representing 50.94 per cent of total transactions during the period. Nigerian institutional and individual investors, which had started the year with dominance of about 63.1 per cent, closed the period with 49.06 per cent with transactions valued at N936.49 trillion.
However, portfolio flow analysis showed a consistent trading pattern in foreign transactions. While foreign investors flowed in more funds than they took out in the first half, they have taken more money out than they invested since the beginning of the second half, showing a sustained trend of profit-taking in the second half.
But with the significant inflows in the first half, net position by the 11-month period still remained positive. Total foreign inflow closed November at N498.9 billion as against total outflow of N473.6 billion, representing positive net inflow of N25.3 billion.
The last two months of October and November also saw marked improvements in foreign interests in the Nigerian market with substantial increase in foreign transactions. Foreign portfolio investments, which had shown month-on-month slowdown in the third quarter, picked up in October. Total foreign transactions closed October at N82.33 billion including inflow of N39.45 billion and outflow of N42.88 billion. Total foreign transactions rose to N88.89 billion in November, including inflow of N42.68 billion and outflow of N46.21 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 seven-month report for the period ended 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 transactions thus slowed to N93.71 billion in July as against N150.24 billion in the previous month. However, foreign investors remained dominant in stock market’s transactions with 62.53 per cent of the aggregate foreign-domestic transactions in July, an increase on 51.13 per cent recorded by foreign investors in June.
With the outflow in July, net foreign investment declined from about N73 billion by June to N42.59 billion by July.
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.
Total foreign transactions in the Nigerian market for the seven-month period stood at N676.25 billion, 50.73 per cent of aggregate transactions of N1.33 trillion by foreign and domestic investors during the period. Breakdown of foreign transactions during the seven-month period showed inflow of N359.47 billion as against outflow of N316.88 billion. Nigerian investors accounted for N656.85 billion over the seven months.
Foreign investors had capitalised on general market optimism in July ahead of the release of the first half earnings reports of quoted companies to monetize and rebalance their portfolios. Nigerian equities had consolidated their bullish rally in July with capital gains of some N581 billion. Aggregate market value of all equities closed July at N12.007 trillion as against its opening value of N11.426 trillion for the month. The All Share Index (ASI), which doubles as benchmark index for all equities on the Nigerian Stock Exchange (NSE) and country index for Nigeria, also rose from month’s opening index of 36,164.31 points to close at 37,914.33 points, a month-month average positive return of 5.08 per cent.
First-half report on foreign portfolio investment flow had shown that total transactions-including buy and sell deals, by foreign investors totaled N582.64 billion, accounting for 49.24 per cent of total turnover at the NSE during the period.
The report had indicated that in most instances, foreign investors flowed in more funds than they took out, leaving the stock market with a positive net foreign investment of about N73 billion within the period. Foreign portfolio inflow stood at N327.66 billion as against outflow of N254.98 billion.
Total turnover value at the NSE during the first half was N1.18 trillion with both foreign investors and domestic investors dominating transactions in three months each. But while foreign investors had maintained gradual and steady increase and decline in portfolio adjustments, Nigerian investors showed large fluctuations.
Nigerian investors dominated the market within the first two months and were supplanted by foreign investors in March and April. Indigenous investors regained dominance in May and were displaced by foreign investors in June.
Foreign investors 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.
The report underlined the structural outline of Nigerian investors, which was largely skewed in favour of institutional investors. For instance, institutional Nigerian investors accounted for 66.7 per cent or N95.78 billion of domestic investors’ turnover in June, last year while retail investors contributed 33.3 per cent or N47.81 billion.
The report had shown stronger momentum in foreign portfolio investments in the stock market as the 2013 first-half report was substantially above six-month average over the past five years.
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 portfolios were particularly the main drivers of transactions on the NSE in the past two years, with foreign investors accounting for average of two-thirds of equity transactions between 2011 and 2012.
The report underlined the early positioning of the foreign investors, who had saw through
