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Foreign investment outflows from NSE rise by 125%

Foreign investment outflows from NSE rise by 125%

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’Femi Asu

 Foreign portfolio investment outflows from the nation’s stock market rose by 125 per cent in May, with the market capitalisation of listed equities losing N1.146tn as it fell to N13.802tn.

The Nigerian Stock Exchange, in its latest NSE Domestic and FPI Report, said there was a 3.45 per cent decrease in foreign inflows to N62.06bn in May from N64.28bn in April.

“However, foreign outflows increased by 124.70 per cent from N58.25bn to N130.89bn within the same period,” the NSE said.

The FPI outflow includes sales transactions or liquidation of portfolio investments through the stock market, while the FPI inflow includes purchase transactions on the NSE (equities only), according to the report.

The PUNCH reported on Wednesday that members of the Monetary Policy Committee of the Central Bank of Nigeria had expressed worry over the exit of foreign portfolio investors from the country on the back of the rise in interest rates in the United States.

“The stock market continues to soften in spite of the relatively good performance reported by many quoted companies. This suggests profit taking and capital outflow, especially by portfolio investors. This is a critical warning signal to me of the possible trend in the coming months as elections uncertainty sets in,” a member, Prof Adeola Adenikinju, said at the last MPC meeting.

Total transactions at the nation’s bourse increased by 49.96 per cent from N212.23bn recorded in April to N318.27bn in May.

The cumulative transactions from January to May increased by 97.13 per cent to N1.409tn in 2018 from N714.99bn recorded in the same period of 2017.

The NSE said, “Foreign investors outperformed domestic investors by 21.25 per cent in May 2018. Total domestic transactions increased by 39.71 per cent from N89.70bn in April to N125.32bn in May 2018. Foreign transactions also increased by 57.47 per cent from N122.53bn to N192.95bn within the same period.”

The report said the institutional composition of the domestic market increased by 97.87 per cent from N46.51bn in April to N92.03bn in April 2018, while the retail composition decreased by 22.92 per cent from N43.19bn to N33.29bn within the same period.

“This indicates a significantly higher participation by institutional investors over their retail counterparts,” the bourse said.

The NSE stated that foreign transactions consistently outperformed domestic transactions between 2011 and 2015, but domestic transactions marginally outperformed foreign transactions in 2016 and 2017, accounting for 52 per cent of the total transaction value in 2017.

It said, “Also, foreign transactions, which was N1.539tn in 2014, declined to N518bn in 2016, but increased significantly by 133 per cent to N1.208tn in 2017, thereby accounting for about 48 per cent of total transactions in 2017.

“Over an 11-year period, domestic transactions have decreased by 62.46 per cent from N3.556tn in 2007 to N1.335tn in 2017. However, there was a significant increase in 2017 by 111 per cent from N634bn recorded in 2016.”

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