Nigeria’s foreign portfolio transactions up 54% in July

The latest domestic and foreign portfolio report released by the Nigerian stock exchange showed that Nigeria’s foreign portfolio transactions increased by N37.8 billion or 54 percent in the month of July.

Foreign transactions dominated activities in the Nigerian stock exchange as foreign portfolio investors’ inflows accounted for 28.5 percent of total transactions while the outflows accounted for 34.4 percent of the total transactions in July 2015.

Analyst have attributed the sharp increase in FPI outflows to the benchmark performance indicator of the Nigerian equities market. It has been in broad retreat on a combination of factors such as companies’ poor half-year (H1) results and investors’ sense of drift since the handover to the administration of Nigeria’s new president, Muhammadu Buhari, barely about 100 days in office.

“In comparison to the same period in 2014, total FPI transactions increased by 90.5 percent, whilst the total domestic transactions decreased by 62.2 percent. FPI outflows outpaced inflows which was not consistent with the same period in 2014,” the report said.

In July, share dealing on the bourse fell to N170.8 billion ($858.3 million) in July, down 23.8 percent from year ago, the stock exchange said, as foreign investors hurt by a weaker naira withdrew cash from equities.

The report also states that domestic investors conceded about 25.82 percent of trading to foreign investors as Domestic transactions decreased from 65.8 percent to 37.1 percent.

Thursday’s dealing saw Nigerian stocks fall for a second straight day, shedding 1.6 percent in the process as investors booked profits from cement, banking and consumer stocks, following a rally last week.

As the president’s 100 days in office milestone in office approach, investors are viewing the occasion with mixed feelings, as key policies and an economic blue print are yet to be revealed. While steps to crackdown on the corruption and Boko Haram’s six-year insurgency have been made, the President has not yet appointed a cabinet or detailed a plan to tackle the country’s struggling economy, analysts are saying.

Vice President Yemi Osinbajo said the country’s’ economy is in its worst state in its 55-year independent history and estimated debts at some $60 billion. Buhari has largely pinned Nigeria’s financial woes on the previous administration and fraud and theft in the oil sector. According to him, Nigeria’s treasury was left “virtually empty,” which forced state employees to go months without pay earlier this year.

The economy’s growth rate has also fallen to 2.4 percent, as key contributing sectors to GDP contracted rather than expanded, following tighter foreign exchange markets and fuel shortages.

Slowing growth in the largest commodities consumer, China is raising concerns among analysts about the near term future of commodity exporters such as Nigeria, as the short fall in demand will contribute to the murky outlook engendered by the glut in the market.