Foreign investors’ six-year equity deals peak at N4.061trn

The past six years have seen transactions by foreign portfolio investors (FPIs) at the Nigerian Stock Exchange (NSE) rise to about N4.061trillion, BusinessDay checks at the Nigerian bourse have shown.

These transactions by foreign investors, which resulted in either inflow or outflow of investible funds at the Nigerian stock market, include purchase transactions (equities only) and sales transactions or liquidation of portfolio investments.

In the post-market crisis era, there has been a renewed appetite for Nigerian equities by foreign portfolio investors as African stock markets continue to outperform global equities in terms of returns.

The increasing presence of foreign investors at the Nigerian bourse is reflected in the five-month (January to May 2013) figures recently polled by the Nigerian Stock Exchange.

A breakdown of the figures shows that in 2007, foreign portfolio investors brought into the Nigerian equities market, about N256billion, and they took away N360billion, resulting to a total of N616billion.

Further in 2008, when the stock market crisis peaked, fund inflows from foreign investors, was put at N154billion, while they took away N634billion, representing total transactions of N787billion.

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In 2009, foreign portfolio investors staked N229billion and took away from the same market, about N196billion, representing a total flow of N425billion.

Out of a total transaction of about N577billion in 2010 by foreign investors, N382billion represented inflows, while N195billion was taken away by the investors.

In 2011, the inflow from foreign investors was put at N513billion while N335billion represented outflow, indicating a total of N848billion. At the end of 2012, foreign portfolio investors staked N451billion in Nigerian equities, while they took away from the same market about N357billion, representing a total of N808billion

“Rotation to equities increased, as portfolio managers who had hitherto underweighted equities, adjusted their portfolios. Continued drop in yields of fixed-income securities aided the rotation to equities,” analysts at Financial Derivates Company said recently, in their Nigerian market update.

For instance, from January to May 2013, foreign portfolio investors had brought about N432.40billion into the Nigerian equities market, indicating 48.61 percent of the total N889.51billion worth of transactions recorded by local and foreign investors. Domestic investors staked N457.11billion or 51.39 percent of the total value of transactions.