A 2018 half- year performance review of portfolio investments in the equities segment of the Nigerian Stock Exchange (NSE) has shown that turnover value increased to about N1.6 trillion from about N935billion recorded in half year 2017.
However, the latest trading figures from major custodians and market operators on their foreign portfolio investment (FPI) flows in six months (January –June) published by the NSE, revealed that value of transactions both by foreign and domestic (local) investors dropped appreciably in June compared to May.
“Total transactions at the nation’s bourse (FPI) reduced by 41 percent from N318.27 billion recorded in May 2018 to N187.78billion (about $614.1 million) in June 2018. But the cumulative transactions from January to June increased by 70.78 percent from N935.26 billion recorded in 2017 to N1.597 trillion in 2018,” the NSE report revealed.
Foreign investors outperformed domestic investors by 9.07 percent in June 2018 as total domestic transactions reduced by 31.87 percent from N125.32 billion in May to N85.37 billion in June 2018. Foreign transactions also reduced by 46.92 per cent from N192.95 billion to N102.41 billion within the same period.
There was 22.71 percent decrease in foreign inflows from N62.06 billion in May 2018 to N47.96 billion in June 2018. However, there was also a significant reduction in foreign outflows, which reduced by 58.40 per cent from N130.89 billion to N54.45 billion within the same period.
The domestic composition of transactions on the exchange between January and June 2018 showed that the institutional composition of the domestic market reduced by 38.88 per cent from N92.03 billion in May to N56.24 billion in June 2018. The retail composition also decreased by 12.52 per cent from N33.29 billion to N29.12 billion within the same period.
“This indicates a significantly lower participation by retail investors over their Institutional counterparts,” the exchange noted.
A track of events showed that transactions at the nation’s bourse increased by 49.96 per cent from N212.23 billion recorded in April 2018 to N318.27billion (about $1.04billion) in May 2018.
The cumulative transactions from January to May increased by 97.13 per cent from N714.99billion recorded in 2017 to N1.409.47trillion in 2018.
As usual, foreign investors outperformed domestic investors by 21.25 per cent in May 2018 as total domestic transactions increased by 39.71 per cent from N89.70 billion in April to N125.32billion in May 2018. Foreign transactions also increased by 57.47 per cent from N122.53billion to N192.95billion within the same period. There was a 3.45 per cent decrease in foreign inflows from N64.28billion in April 2018 to N62.06billion in May 2018. However, foreign outflows increased by 124.70 per cent from N58.25billion to N130.89billion within the same period.
At the start of 2018, FPI investment decreased by 17.96 per cent from N480.80 billion recorded in December 2017 to N394.44billion (about $1.29billion) in January 2018. However, in comparison to the same period in 2017, total transactions increased significantly by 313.81 per cent from N95.32billion recorded in 2017. Foreign investors conceded about 15.64 per cent of trading to domestic investors. Total foreign transactions decreased by 19.42 percent from N206.48 billion recorded in December 2017 to N166.39billion in January 2018.
Domestic transactions also decreased by 16.87 per cent from N274.32 billion to N228.05 billion within the same period. Foreign inflows decreased by 47.10 percent from N173.43billion in December 2017 to N91.75 billion in January 2018 while foreign outflows increased by 125.84 percent from N33.05billion to N74.64billion within the same period.
Meanwhile, a comparative analysis conducted by the research unit of the NSE (2011 and 2015), revealed that foreign transactions consistently outperformed domestic transactions. However, domestic transactions marginally outperformed foreign transactions in 2016 and 2017, accounting for 52 per cent of the total transaction value in 2017.
Also, foreign transactions which totalled N1.539trillion in 2014 declined to N518billion in 2016, but increased significantly by 133 per cent to N1.208trillion 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 N3.556trillion in 2007 to N1.335trillion in 2017. However, there was a significant increase in 2017 by 111 per cent from N634 billion recorded in 2016.
However, a comprehensive review of the performance of the stock market in June indicated that the NSE ASI advanced in the month of June, buffering YTD returns to 0.46 per cent, from a negative of 7.67 percent in May 2018, excluding the Oil & Gas Index which gained 7.12 percent month on month (MoM). Other sectoral indices ended in negative territory albeit improved from previous months’ returns with the exception of the Insurance index, which took a further 5.66 per cent hit. Turnover declined significantly by 41 per cent MoM, lowering daily average turnover to N4.94billion by month end to justify the 41.3 per cent decline in market depth, which closed at 8.13 per cent. But despite improvement in market breadth from 0.28 in previous month to 0.84, losers still topped the chart relative to gainers.
“Despite a strengthening of the naira against the dollar, turnover in the IEFX window declined by 20.7 per cent relative to May 2018. This may have contributed to lower net portfolio flows to the equities market as earlier indicated. The observed growth in the nation’s foreign reserves could be attributable to the rise in crude oil production within the period, which made up for the drop in crude oil price,” NSE disclosed.
The report also added that, “FPIs continued to dominate trading with 54.2 per cent participation, while domestic investors constituted 45.8 per cent within the month. Amongst the domestic players, PFAs led the pack with 22.6 per cent, followed by institutional investors (non-PFAs) who accounted for 11.4 per cent of market activities. Retail participation also increased to 5.4 per cent from 2.96 per cent in the previous month.”
