The Nigerian Exchange Limited, formerly Nigerian Stock Exchange, revealed in its latest report that year-to-date inflows from foreign portfolio investors into the equity market dropped by N37.85bn, just as outflows in August surpassed inflows by N15.93bn.
In the August 2021 issue of its Domestic and Foreign Portfolio Investment report, the NGX disclosed that foreign inflows in August totalled N10.72bn, while outflows were higher by 3.92 per cent at N14.64bn.
Further analysis of the numbers showed that YTD, foreign inflows hit N123.46bn, 23.46 per cent lower than N161.31bn pumped into the local bourse by foreign investors in the corresponding period of 2020.
Foreign outflows amounted to N139.39bn YTD, 54.97 per cent lower than N308.89bn recorded as of August 2020.
On a monthly basis, the NGX polls trading figures from capital market operators and their domestic and foreign portfolio investment flows.
The performance of the current month when compared to the performance in August 2020 revealed that total transactions dropped by 5.33 per cent from N94.45bn to N89.42bn.
The total transactions executed between August and July revealed that total domestic transactions decreased by 13.71 per cent from N74.24bn in July to N64.06bn in August.
On the other hand, total foreign transactions increased by 63.30 per cent from N15.53bn to N25.36bn between July and August.
Analysis of domestic transactions showed that institutional investors outperformed retail investors by 0.44 per cent.
A comparison of domestic transactions in the current and the prior month revealed that retail transactions decreased by 15.16 per cent from N37.59bn in July to N31.89bn in August.
Similarly, the institutional composition of the domestic market decreased by 12.22 per cent from N36.65bn in July to N32.17bn in August.
The Chief Executive Officer of Sofunix Investment and Communications, Mr Sola Oni, told our correspondent that Foreign Portfolio Investors had been very cautious about the Nigerian market for a while.
The stockbroker said they were speculators with calculated risk models.
He said, “They are not comfortable with a mix of macroeconomic vagaries such as high inflation and exchange rates conundrum.
“Scarcity of forex has also become a major impediment to their investment decision as repatriation of capital is no longer a tea party.
“They do a lot of risk analysis, including country risk.”
He added that they knew the impact of insecurity on the country’s output.