Foreigners who invested about N178.21billion in Nigeria’s equities market took out N171.38billion in ten (10) months to October 31.
This implies that these portfolio investors left just N6.83billion in Nigeria equities, according to summary of transactions as at October 31. In same period last year (2021), these foreign portfolio investors (FPI) staked N156.3billion and took away N173.32billion.
How foreigners played in stocks month-on-month
In January 2022, foreigner invested N18.10billion in stocks but took out N23.21billion from the market. In February, they brought in N20.86billion and took out N24.57billion. In March, foreigner invested N16.37billion in Nigerian stocks but took out N25.80billion.
In April, foreign inflows into the market worth N15.02billion while N12.06billion was taken out of the market by foreign portfolio investors. In May, it was N25.53billion that foreigners invested in Nigerian stocks while they took out N19.7billion; in June they invested N24.63billion in Nigerian stocks and moved out N17.56billion from the market.
Summary of stocks transactions as at October 31 show that foreign inflows into the stock market worth N13.68billion while the foreign outflow was N16billion. In August, it foreign inflow into Nigerian stock market was N15.78billion while N12.43billion was recorded as outflow by foreign investors.
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In September, foreigners invested N10.08billion in stock market but moved N9.59billion out of the market while in October they invested N18.16billion in stocks but moved out N10.39billion.
The NGX year-to-date (YtD) return was 14.47 percent as at Monday December 13.
Remarkable rebound in November
“After a dismal performance in October, the Nigerian Exchange Limited (NGX) made a remarkable comeback in November. With a gain of +8.7percent in November, the Nigerian exchange had its second-best monthly performance of the year, only after January’s gain of 9.1percent.
“The other bourses we track on the sub-continent are the Nairobi Stock Exchange 20 (NSE20), and the Johannesburg Stock Exchange (JSE, Joburg). While the Joburg delivered an outstanding return of 12.2percent, Nairobi delivered a negative performance of -2.4percent for the month,” FBNQuest Capital Research noted in their December 8 note.
“A significant factor behind the Lagos bourse’s strong performance during the month was the rebound in the shares of a few bellwether stocks, which had fallen sharply in October.
“Top on this list are the shares of Dangote Cement (DangCem), which were up +19percent during the month, a sharp contrast from the -11percent decline it delivered the previous month. “DangCem shares plunged in October, following a dispute with the Kogi State government over the Obajana Cement plant, its largest production facility.
However, investor sentiment in the stock has since improved following a court order restraining the Kogi state government from shutting down the cement production facility,” FBNQuest Capital Research further noted.
“Another prominent name in this group is Airtel Africa, whose shares recovered in November, gaining +13.7percent during the month, after falling -36percent in October.
“It appears that the shares have again started to garner interest from the offshore community, due to its dual-listed status which suits their exit strategy. The shares of MTN Nigeria also gained +11percent during the month, compared with -1.5percent the previous month.
The NGX has delivered negative returns in the last two pre-election years. However, it is headed to buck the trend given its positive performance this year,” the analysts said.
What analysts expect this week
“We expect another round of mixed trading sessions this week, amid lukewarm activity,” said Vetiva research analysts in their December 12 note.
“We expect a reversal of the positive sentiment in the market. This is premised on the likelihood of profit taking activities on stocks that have appreciated in the previous weeks.
“We also consider activities in the fixed income (FI) space this week (Bond Auction and Treasury Bills Primary Market Auction) which could stifle liquidity and constrain buying interests in the equities market.
“However, we do not rule out the possibility of investors taking position on large cap stocks currently trading at attractive prices. Overall, we expect the market to close in the negative region,” Meristem analysts said in their December 12 stock recommendations.
“At current levels, we consider the market steeply overbought in the short term with Relative Strength Index (RSI) of 79.4 as well as trading close to its upper Bollinger limit. In addition, MACD level and signal lines indicate slowing momentum in the recent bullish run.
“Lastly, the profit-taking activities in the Banking sector (following recent rally) indicates investors are shifting towards profit-taking mood as we approach the end of the year,” United Capital Research said in their December 12 investment view.
