By Chinwendu Obienyi
Owing to economic challenges, foreign investors in Nigeria’s equities market sold off N311.41 billion worth of portfolio investments over a six-month period, data from the Domestic and Foreign Portfolio Investment of the Nigerian Exchange Limited (NGX) revealed on Wednesday.
The report which is prepared on a monthly basis by NGX Regulation Limited, also noted that about N540.48 billion worth of foreign transactions was recorded from January to June 2024.
According to NGX, of the total foreign transactions, N311.41 billion worth of portfolio investments were liquidated in H1 of this year, compared to a foreign outflow of N73.06 billion recorded in the corresponding period in 2023.
However, foreign investment inflow accounted for N229.07 billion in H1 2024, against N72.02 billion reported in the same period last year. The report further revealed that domestic bourse recorded a total transaction of N2.06 trillion from domestic investors in H1 2024. This brought the total worth of domestic and foreign transactions in H1 2024 to N2.60 trillion as of June 31.
According to the report, domestic investors accounted for 79.3% of 2024 H1 transactions compared to 90% reported in the corresponding period last year. NGX also said foreign transactions accounted for 20.75% of the total transactions in H1 2024, compared to 10% in H1 2023. NGX said as of June 30, total transactions decreased marginally by 0.23% from N355.38 billion (about $239.56 million) in May to N354.55 billion (about $241.06 million) in June.
The performance of the current month when compared to the performance in June 2023 (N406.75 billion) revealed that total transactions decreased by 12.83%,” the report said.
Reacting to the figures, most especially the portfolio investments which were sold off, market operators explained that this significant divestment highlights potential concerns or shifts in investor sentiment towards the Nigerian market.
“The reasons behind this large-scale liquidation include economic challenges, regulatory changes, or global market trends impacting investor confidence. Such a substantial outflow of funds may also affect the overall liquidity and market stability of the NGX”, they said.
Providing highlights of the performance of the market over the last decade, NGX said, “Over a seventeen (17) year period, domestic transactions decreased by 10.94% from N3.556 trillion in 2007 to N3.167 trillion in 2023; whilst foreign transactions also decreased by 33.28% from N616 billion to N411 billion over the same period.
Total domestic transactions accounted for about 89% of the total transactions carried out in 2023, whilst foreign transactions accounted for about 11% of the total transactions in the same period.”