Domestic investors raise bet in Nigerian equities market

Trading data at the Nigerian bourse showed that the amount of transactions done in the Nigerian equities market last month by domestic investors increased when compared with that of foreign investors.

Trading figures polled over a five-month period (January to May), showed that domestic investors at the Nigerian Stock Exchange (NSE) accounted for 51.39 percent of equity trading, leaving 48.61 percent for foreign investors.

On a monthly basis, the Nigerian Stock Exchange polls trading figures from major custodians and market operators on their foreign portfolio investments (FPI).

Only in the month of May 2013, domestic investors controlled 51.32 percent of equity trading leaving 48.68 percent for foreign investors. This is against April level of 64.48 percent in favour of foreign investors and 35.52 percent for domestic investors.

According to the NSE in its recent report titled “foreign portfolio participation in equity trading,” the FPI transactions which started at 36.9 percent at the beginning of the year, increased to 52.8 percent at the end of the first quarter of 2013. The increasing trend of FPI transactions continued into the second quarter of the year and closed at 64.5 percent at the end of April. However, this reduced significantly to 48.7 percent at the end of May.

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“Domestic transactions on the other hand decreased from 63.1 percent at the beginning of the year to 47.2 percent at the end of the first quarter and closed at 35.5 percent at the end of April. However this increased significantly to 51.3 percent at the end of May,” the Stock Exchange said.

The foreign portfolio investments outflow includes sales transactions or liquidation of portfolio investments, whilst the FPI inflow includes purchase transactions on the Nigerian Stock Exchange (equities only).

Looking at trend between 2007 and 2012, total FPI transactions, which accounted for 14.8 percent of total transactions in 2007 consistently increased over the years to 66.8 percent in 2011 (representing an increase of 52 percent over the 4 year period). However, this dropped to 61.4 percent in 2012.

Domestic transactions on the other hand peaked at 85.2 percent in 2007 but dropped significantly to 33.2 percent of total transactions in 2011 (representing a sharp reduction of 52percent in the 4 year period). This subsequently increased to 38.6 percent in 2012.