By Chinwendu Obienyi
Amid the bounce of a new administration and raft of changes in government policies, foreign portfolio investments (FPIs) appear to be gradually coming back to the economy as total foreign transactions at the floor of the Nigerian Exchange Limited (NGX) grew to $60.49 million in the month of June 2023.
This is according to the recently released data on domestic and foreign portfolio investment report in Nigeria’s equity trading for the month of June 2023. It will be recalled that the total foreign transactions in the first four months of 2023, stood at N62.18 billion owing to the soaring inflation, prolonged FX scarcity as well as uncertainties building up to the 2023 elections.
However, the report – prepared on a monthly basis by NGX Regulation Limited, with trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows, revealed that while total domestic transactions on the exchange stood at N1.306 trillion in six months of 2023, total foreign transactions stood at N145.08 billion in the same period.
The report revealed that the total transactions executed between the current and prior month (May 2023) revealed that total domestic transactions increased by 26.34 per cent from N285.76 billion in May to N361.01 billion in June 2023. Similarly, total foreign transactions increased significantly by 23.09 per cent from N37.16 billion (about $79.88 million) to N45.74 billion (about $60.49 million) between May 2023 and June 2023.
The report also revealed that total transactions at the nation’s bourse increased by 25.96 per cent from N322.92 billion (about $693.99 million) recorded in May 2023 to N406.75 billion (about $537.87 million) in June 2023. The performance of the current month when compared to the performance in June 2022 (N156.52 billion) revealed that total transactions increased by 159.87 per cent.
Furthermore, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by 78 per cent. Domestic inflows and outflows stood at N180.91 billion and N180.11 billion while foreign inflows and outflows stood at N22.72 billion and N23.02 billion.
The report also revealed that institutional investors outperformed retail investors by 32 per cent whilst a comparison of domestic transactions in the current and prior month (May 2023) revealed that retail transactions increased by 40.70 per cent from N88.50 billion in May to N124.52 billion in June 2023. Similarly, the institutional composition of the domestic market increased marginally by 19.89 per cent from N197.26 billion in May 2023 to N236.49 billion in June 2023.
Over a 16-year period, domestic transactions decreased by 45.30 per cent from N3.556 trillion in 2007 to N1.945 trillion in 2022 whilst foreign transactions also decreased by 38.47 per cent from N616 billion to N379 billion over the same period. Total domestic transactions accounted for about 84 per cent of the total transactions carried out in 2022, whilst foreign transactions accounted for about 16 per cent of the total transactions in the same period.
It will be recalled that the Group Chief Executive Officer, NGX Group, Oscar Onyema, had expressed optimism that the nation’s economy will witness more investment flows.
Speaking during a panel session at the 7th edition of the International Court of Arbitration (ICC) Africa Conference on International Arbitration which held in Lagos recently, Onyema said, “All these are the right noises for money. Money goes to the least resistant places where it can get the best risk adjustment returns without unnecessary hassles because there is competition across the globe.
“On what we have seen in the last eight years, there has been an outflow of foreign portfolio investments predominantly and more than half of our markets are outside of America, but with these policy changes, you can begin to understand why we are very optimistic that these flows will come back to the economy”.