NGX:  Foreign Investors’ Outflow Up 11.4% YoY to N138.97bn on FX Scarcity

Kayode Tokede

Following the scarcity of foreign exchange in Nigeria, foreign investors’ have continue to exit the stock market as outflow on the floor of the Nigerian Exchange Limited (NGX) grew by 11.4 per cent Year-on-Year (YoY) to N138.97billion in seven months of 2022 from N124.75billion reported in seven months of 2021

The Domestic and Foreign Portfolio Investment (FPI) report that captures transactions as well as trading figures from market operators, revealed that foreign investors’ inflow, thus, rose by 19.03 per cent YoY to N134.19billion in seven months from N112.74billion reported in seven months of 2021.

The report disclosed that total foreign investors’ transactions in the equities market rose by 15.02 per cent to N273.16billion in seven months from N237.49billion reported in seven months of 2021.

The report, which is for for the month of July disclosed that foreign inflows recorded N13.68 billion, while foreign investors’ outflow stood at N16 billion.

According to capital market analysts, since the outbreak of COVID-19, inflows across capital importation, loans, diaspora remittances, exports, income from investments and other autonomous sources have been dwindling.

However, domestic investors have continued to hold its ground on the floor of the NGX despite rising inflation and currency volatility in the foreign exchange market, which remained key drivers of the domestic & foreign portfolio investment.

The total transactions done by domestic investors on the floor of the NGX grew by 68.05 per cent YoY to N1.49 trillion in seven months as against N886.7 billion recorded in seven months of 2021.

The report also disclosed that domestic retail investors traded N482.79billion in seven months of 2022, representing an increase of 29.5per cent from N372.88billion in seven months of 2021, while domestic institutional investors traded N1,007.28billion in seven months of 2022 from N513.82billion in seven months of 2021.

Although, the July report revealed that total transactions at the nation’s bourse decreased by 35.36 per cent from N156.52billion (about $371.53million) in June 2022 to N101.18 billion (about $236.86 million) in July 2022, the performance of the current month, however, when compared to the performance in July 2021 (N89.77 billion), total transactions increased by 12.71 per cent.

Furthermore, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 42 per cent while domestic inflows and outflows stood at N36.97 billion and N34.53 billion respectively, in the month of July 2022.

Over a 15-year period, domestic transactions had decreased by 58.80 per cent from N3.556 trillion in 2007 to N1.465 trillion in 2021 whilst foreign transactions also decreased by 29.38 per cent from N616 billion to N435 billion over the same period.

On the other hand, total domestic transactions accounted for about 77 per cent of the total transactions carried out in 2021, whilst foreign transactions accounted for about 23 per cent of the total transactions in the same period.