Foreign inflows into the Nigerian equities market remained higher at N468.30billion as against N315.04billion outflow, an excess of N153billion as at September 30, 2017. This is an indication that the market remains attractive to foreign investors looking at same period in 2016 when foreign inflow stood at N203.83billion while outflow was N209.31billion.
While Nigeria’s economy which exited recession shows potential for further growth and crude oil production her main source of dollar revenue recovered, foreign investors have remained upbeat this year in some of the nation’s listed stocks.
The nation’s stocks further attracted foreign investors as FX market maintained stability amid continued effectiveness of the Investors’ & Exporters’ (I&E) window. Though month-on-month (MoM), there was significant decrease in foreign transactions in September with a record N84.27billion compared to August level of N208.34billion. This month-on-month decline may have been as a result of uncertainty over the quality of nine months (9M 2017) earnings from key names in the market.
According to Nigerian Stock Exchange (NSE) trading figures polled from major custodians and market operators on their Foreign Portfolio Investment (FPI) flows, total transactions at the nation’s bourse significantly decreased by 67.36percent from N396.86billion recorded in August 2017 to N129.52 billion (about $0.42billion) in September 2017.
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Highlights of the domestic composition of transactions on The Exchange between January and September 2017 show the institutional composition of the domestic market decreased by 85.46percent from N149.41 billion recorded in August to N21.72billion in September 2017.
The retail composition also decreased by 39.84percent from N39.11 billion to N23.53billion within the same period. This indicates a higher participation by institutional investors over their retail counterparts.
Analysts had expected the performance of the equity market in September to be dictated by a tackle-trade between the bulls and bears, given the dearth of bullish triggers in the market and barring any undesirable event that may spark a negative reaction.
“We also expect the overall policy outcome of the September MPC meeting to determine market sentiment”, United Capital research analysts had said.
At the end of its September policy meeting, the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) left key monetary policy rates unchanged in line with consensus expectations.
Key consideration highlighted included the fragility of the recovery in the local economy, unrelenting pressure on price level and sustained uncertainties in the global economy, especially the US-Fed announcement to scale down on asset purchases as well as hike rates once more before year-end.
The aggregate value of transactions from January to September 2017 increased by 78.60 percent, from N927.08billion recorded in 2016 to N1.655trillion in 2017. Foreign investors outperformed domestic investors by 8.13percent. Total foreign transactions decreased significantly by 59.55percent from N208.34billion recorded in August 2017 to N84.27billion in 2017. Total domestic transactions also decreased by 68.77percent from N188.52 billion to N45.25billion within the same period.
Foreign inflows decreased by 70.74percent from N165.47 billion in August 2017 to N48.42billion in September 2017. Foreign outflows also decreased by 16.38percent from N42.87 billion in August 2017 to N35.85billion in September 2017.
Iheanyi Nwachukwu
