The Nigerian Exchange (NGX) had a 14% year-over-year increase in foreign portfolio inflow of $161.4 million in the first half of 2024, compared to $141.8 million in the same period in 2023. Compared to N72.02 billion at the end of H1 2023, the market saw a total foreign inflow of N229.07 billion during the period.
It was a 218% YoY gain in Naira, but the growth was somewhat slower in dollar terms because of the Naira’s 64% depreciation, which went from N508/$ as of H1 2023 to N1420/$ as of H1 2024.
During the course of the half-year, the market had a $161.4 million foreign inflow, but there was also a $219.4 million foreign outflow. This represented a staggering 52.5% rise from the $144 million foreign outflow recorded from the market in H1 2023.
Foreign participation in the market
About $380.74 million (N540.48 billion) in foreign participation was made on the NGX in the first half of 2024, accounting for 20.75% of all transactions that occurred on the exchange.
Compared to H1 2023, when overall foreign involvement was roughly $285.7 million (N145 billion), or roughly 10% of all market transactions, this represents a significant improvement.
The total number of transactions on the NGX in H1 2024 was approximately N2.604 trillion, or $1.83 billion. As of H1 2023, there were N1.45 trillion in transactions, a 79.5% YoY growth in Naira. But when expressed in US dollars, the year-over-year reduction was 36%, with a total of $2.86 billion in transactions in the first half of 2023.
Also, in dollar terms, there was a 43% year-on-year decline in domestic transactions, from $2.57 billion as of H1 2023 to $1.45 billion as of H1 2024.
In the second quarter of 2024, there was a 53% spike in foreign participation in the NGX, as the market recorded a total foreign participation of N327.3 billion, or $230.5 million, in Q2 2024, in contrast with N213.2 billion, or $152.6 million, recorded in Q1 2024.
June 2024 transactions
May 2024 witnessed the highest participation of foreign portfolios in the NGX since November 2021, with a foreign participation of 34.97%. In May, the NGX recorded a total transaction of N355.38 billion, with foreign participation of N124.28 billion ($83.78 million).
The market’s total transactions declined marginally by 0.23% to N354.55 billion in June, from the figure posted in May.
In that month, foreign participation declined to 23.18%, as the total foreign portfolio transactions were about N82.19 billion, or $55.88 million.
Year-on-year, there was a 13% decline in the total transactions that took place in June 2024, as the market recorded a total transaction of N406.75 billion in June 2023. There was also a 34% YoY decline in foreign portfolio transactions from June 2023, as the market recorded a foreign portfolio transaction of $85.04 million in June 2023.
Commentary
The volume of foreign portfolio outflows was greater than foreign portfolio inflows in all six months of the year, safe for March.
With foreign portfolio outflows exceeding inflows, it raises a question on the concept of FPIs contributing to forex liquidity within the country, as foreign investors are more in the market to take out than bring in.
as beingWith the exceptional performance of the NGX as the best performing stock exchange in Africa in the first half of 2024, as well as one of the fastest-growing emerging markets, attention is drawn to the capital-gaining potential of the market.
Also, the increase in foreign investor interest in the NGX is a good omen for the recapitalization effort by the banks.
