Total value of Foreign Direct Investments (FDIs) on the floor of the Nigerian Stock Exchange (NSE) rose to N143.65 billion in the last seven months of 2020. According to the NSE’s Domestic & Foreign Portfolio Investment Report, total foreign transactions carried out year till date (YTD) was about N431.22 billion whilst total domestic transactions YTD stood at N675.55 billion during the period under review.
The report stated that the total value of domestic transactions outperformed transactions executed by foreign investors by N244.33 billion or 56.66 per cent. As at July 31, 2020, total transactions at the nation’s bourse fell by 19.92 per cent from N128.88 billion (about $333.25 million) in June 2020 to N103.21 billion (about $265.55 million) in July 2020.
The performance of the current month when compared to the performance in July 2019 (N113.47 billion) revealed that total transactions decreased by 9.04 per cent.
In July 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 32 per cent. A further analysis of the total transactions executed between the current and prior month (June 2020) revealed that total domestic transactions decreased by 5.40 per cent from N72.54 billion in June to N68.62 billion in July 2020.
However, total foreign investors’ transactions declined sharply by 38.60 per cent from N56.34 billion (about $90.89 million) to N34.59 billion (about $89.00 million) between June and July 2020 Further checks showed that Institutional Investors outperformed Retail Investors by 6 per cent.
Analysts who spoke to Daily Sun, noted that foreign players were restricted due to COVID-19 pandemic as well as economic lockdown that ensued. They however, said, this contributed to increased participation from domestic investors, stressing that timely market information drove liquidity in the market.
Speaking during a webinar titled, “Capital Markets in a Pandemic,”, the Chief Executive Officer, NSE, Oscar Onyema, noted that Nigeria’s economy in the last three months was facing dwindling crude oil prices and that the coronavirus pandemic had led to foreign investors’ exit from the capital market.
He said: “During the lockdown, we kept the capital market opened.We immediately activated business continuity plans and luckily for us, the evolution of technology and digitalization at all capital markets globally started before the pandemic. We were able to quickly flip the switch and go completely remote.
Also commenting on the development, Managing Director of APT Securities, Kurfi Garba, said investors picked the capital market as a better option to invest due to the attractive dividend yield on stocks which remained undervalued.
He said, “Investors are looking for options as to where they can invest their money and we are all aware of the CBN’s recent directive dropping savings account interest rate to 1.25 per cent per annum, is that an investment compared to inflation that is close to 13 per cent.