Foreign firms have increased their stake in the Nigerian Exchange Limited (NGX) to an impressive N71.37 billion (approximately $75.76 million) in November, marking a remarkable surge of 113.94% from the previous month’s N33.36 billion.
This revelation comes from the latest Domestic and Foreign Portfolio Investment Report for November, released by the Nigerian Exchange Limited. The report highlights a positive shift in foreign transactions within the Nigerian capital market, which has been grappling with a consistent decline exacerbated by the challenges posed by the Covid-19 pandemic in 2020.
As of September 2023, domestic transactions totaled N2.454 trillion, while foreign transactions were valued at approximately N258.02 billion. The latest data from NGX indicates that by November, foreign transactions reached N363 billion, with domestic transactions standing at N2.871 trillion.
In the month-to-month comparison, foreign transactions dipped to N33.36 billion in October from N35.24 billion but rebounded significantly to N71.37 billion in November.
The report states, “The total transactions executed between the current (November) and prior month (October 2023) revealed that total domestic transactions increased by 22.24 per cent from N187.58 billion in October to N229.30 billion in November 2023. Similarly, total foreign transactions increased by 113.94 per cent from N33.36 billion (about $36.83 million) to N71.37 billion (about $75.76 million) between October 2023 and November 2023.”
A detailed breakdown of foreign transactions unveils a dominance of outflows over inflows. In November 2023, foreign inflow amounted to N157.32 billion compared to N205.43 billion in outflow, with the highest inflow recorded at N34.77 billion and the lowest in April at N3.67 billion.
Examining the general market trend, total transactions at the Nigerian bourse surged by 34.08% from N220.94 billion (about $243.93 million) in October to N300.67 billion (about $319.15 million) in November 2023. This represents a remarkable 188.33% year-on-year increase compared to the November 2022 figure of N104.28 billion.
Notably, domestic investors outperformed their foreign counterparts by 52% in terms of the total value of transactions in November 2023. Institutional investors also outpaced retail investors by 20%, as retail transactions increased by 7.30% from N86.46 billion in October to N92.78 billion in November 2023. Meanwhile, the institutional composition of the domestic market rose by 35.01% from N101.12 billion in October 2023 to N136.52 billion in November 2023.
Analyzing the historical trend, the market witnessed a 45.30% decrease in domestic transactions from N3.556 trillion in 2007 to N1.945 trillion in 2022. Similarly, foreign transactions declined by 38.47% from N616 billion to N379 billion over the same period. In 2022, domestic transactions accounted for 84% of the total, with foreign transactions making up the remaining 16%.
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