Domestic Investors Lead as Nigerian Bourse Attracts N879bn in First Quarter

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Goddy Egene
Domestic investors dominated transactions on the Nigerian Stock Exchange (NSE) in the first quarter (Q1) ended March 31, 2018 as they traded N497.15 billion, compared with the N381.82 billion traded by foreign investors.

Domestic investors, therefore, accounted for 56.56 per cent, while foreign investors were responsible for 43.44 per cent. In all, the Nigerian bourse attracted N878.97 billion in Q1 of 2018, showing a jump of 93 per cent from N454.48 billion in Q1 of 2017. A monthly analysis of the transactions showed that investors staked N394.44 billion in January, N212.05 billion in February and N272.48 billion in March.

However, total domestic transactions increased by 8.88 per cent from N128.83 billion in February to N140.27 billion in March 2018, while foreign transactions increased more significantly by 58.87 per cent from N83.22 billion to N132.21 billion within the same period.

A further analysis of the total domestic transactions indicated that domestic institutional investors remained the dominant players. In the three months under review, the domestic institutional investors traded N288.91 billion, while retail investors accounted for N208.24 billion. The domestic institutional investors staked N121.56 billion in January, N76.08 billion in February and N91.27 billion in March. On the other hand, domestic retail investors traded N106.49 billion in January, N52.75 billion in February and N49 billion in March.

Meanwhile, foreign portfolio investment ( FPI) transactions report showed that foreign investors invested more in equities than they took. The report showed positive net foreign inflows of N30.9 billion compared with a negative net foreign investment position of N86.36 billion in the first quarter of last year.
The report obtained at the weekend indicated that foreign inflows and outflows rose to N206.35 billion and N175.47 billion in first quarter, indicating a positive net foreign investment position of N30.9 billion. Total foreign inflow and outflow of N62.35 billion and N148.71 billion were recorded in comparable period of 2017, which left the country with net FPI deficit of N86.36 billion.

These two key indicators-inflow and outflow- are used to measure foreign investors’ participation in the equities market as a barometer for the economy. FPI outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions in the market.
The report is regarded as a credible gauge of FPI as it coordinates data from nearly all active investment bankers and stockbrokers.

Monthly analysis showed a positive trend in net foreign investment inflow in the first quarter of the year. Foreign inflow amounted to N91.75 billion in January as against outflow of N74.64 billion. Foreign inflow and outflow stood at N44.89 billion and N38.33 billion in February while foreign inflow and outflow recovered hit N69.71 billion and N62.50 billion in March.

Commenting on the FPI, the Chief Executive Officer, Capital Assets Limited, Alhaji. Ariyo Olushekun, said it indicated confidence in the capital market in particular and economy in general.
According to him, the positive trading position of the FPI shows that foreign investors see value in the economy and the stock market, since investors trade for value.