Foreign portfolio investors increased the value of their buy orders for Nigerian equities by 10.59 per cent from N57.78 billion in July to N63.90 billion in August 2019.
In its latest report on foreign portfolio investments (FPIs), released by the Nigerian Stock Exchange (NSE), yesterday, the Nigerian bourse said that foreign inflows in the market stood at N34.92 billion as against outflows of N28.98 billion, indicating a 10.59 per cent increase in total foreign transactions from N57.78 billion in (about $188.6 million) in July 2019 to N63.90 billion (about $208.4 million) in August 2019.
The FPI report, coordinated by the NSE, aggregates transactions from major custodians and capital market operators and it is widely regarded as a credible measure of FPI trend. The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.
Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. Sectoral analysis delineates the proportion of foreign to local participation, institutional to retail investors as well as the momentum of activities among others.
With more activities by foreign investors, who dominate transactions at the market, total transactions at the nation’s bourse consequently increased by 7.51 per cent from N113.47 billion in July 2019 to N121.99 billion in August 2019. This means that confidence is slowly slipping into the market after it suffered a net deficit of N26.6 billion in foreign portfolio transactions in the first quarter of this year amidst fears of political and macro-economic uncertainties. The market’s performance in the current month when compared to the same period (August 2018) of the prior year revealed that total transactions decreased by 8.85 per cent while the total value of transactions executed by foreign investors outperformed transactions by domestic investors by 4 per cent.
The analysis of the total transactions executed between the current and prior month (July 2019) revealed that total domestic transactions increased by 5.39 per cent from N55.69 billion in July to N58.69 billion in August 2019.
However, institutional composition of the domestic market increased by 12.95 per cent from N30.25 billion in July 2019 to N34.17 billion in August 2019.
The Exchange had over a 12 year period, recorded 66.68 per cent drop from N3.556 trillion in 2007 to N1.185 trillion in 2018 as on domestic transactions whilst foreign transactions increased by 97.88 per cent from N616 million to N1.219 trillion over the same period.
Meanwhile, due to increasing consumption and spending on financial market data and market data analytics, the value of total global spend on all financial market data, analysis and news now stands at about $28.5 billion.
Chief Executive Officer of the Nigerian Stock Exchange, NSE, Oscar Onyema, disclosed this at the fourth edition of the NSE Market Data Workshop in Lagos recently.
Onyema noted that despite the evolving needs of consumers demanding for financial information globally, Nigeria still has low inclination towards investments while adding that market commentators have estimated the value of total spending on all financial market data, analysis and news at about $28.5 billion while the potential market size of financial information is valued at $50 billion according to McKinsey estimates.
“According to a research by FSDH, which reported the savings ratio in Nigeria as one of the lowest among selected countries including China, India, Kenya, Malaysia, South Africa, United Kingdom, and USA, the ratio of mutual fund assets to Nigeria’s Gross Domestic Products (GDP) is also very low at less than one percent, despite the growth of mutual funds in the country in recent times”, Onyema said.