A Review of the Nigerian Energy Industry

NSE: Foreign portfolio investors’ transactions hit N133.95bn in February

05 April 2015, Lagos – As the nation savours the harvest of commendations from the international community for the peaceful prosecution of last week’s Presidential election, there are strong indications that more portfolio investors may seize the momentum to increase their stakes in the Nigerian economy.

The development was coming on the heels of a report by the Nigerian Stock Exchange which showed that monthly foreign portfolio investment’s transactions at the nation’s bourse rose to N133.95 billion (about $.68 billion) at the end of February, a 35.15 per cent rise from the January figure put at N99.11 billion.

According to the NSE report, domestic investors conceded about 45.22 per cent of trading to foreign investors as domestic transactions decreased from 47.76 per cent to 27.39 per cent while FPI transactions increased from 52.24 per cent to 72.61 per cent over the same period.

Total foreign outflows for January were N51.08 billion while outflows in the month of February were significantly higher at N81.60 billion. Market watchers attributed the surge in the figure to the fears expressed over the general elections.

In comparison to the same period in 2014, total FPI transactions decreased by 1.71 per cent, whilst the total domestic transactions decreased by 19.03 per cent. FPI outflows outpaced inflows which was consistent with the same period in 2014. Overall, there was a 7.15 per cent decrease in total transactions in comparison to the same period in 2014.

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

A further breakdown showed that while total transactions for the month of January were N189.72 billion, that of February was N184.49 billion. However, while total foreign inflow for the month of January was N48.03 billion, that of February was N52.35 billion. The report however showed that the foreign component of the total transactions was N99.11 for January whereas the figure for the month of February was N133.95 billion.

On the other hand, total domestic transaction for the month of January was N90.61 billion whereas N50.54 was the total for February.

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

Foreign investors, alarmed by the economic and political risks in the country, had pulled out N793.17bn from the Nigerian Stock Exchange between January and November 2014.

The figure represents 67.5 per cent increase on the N473.61bn foreign portfolio investment outflow from the stock market in the corresponding period of 2013.

According to capital market analysts, the exit of foreign investors from the equities market was a major reason for its poor performance in 2014 during which the market closed with a negative return of 16.14 per cent.

However, expectations are high that the peaceful conduct of the presidential elections coupled with the decision of President Goodluck Jonathan to concede defeat had gone a long way in staving off violence, a development said to have rekindled the interest of foreign portfolio investors in the Nigerian economy.
Analysts therefore expect market to significantly pick up after next week’s governorship and house of assembly elections.

– This Day

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