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By Chinwendu Obienyi and Chukwuma Umeorah
Amid insecurity, rising macroeconomic headwinds as well as uncertainties in the build-up to the 2023 elections, foreign inflows on the Nigerian Exchange Limited (NGX) fell to N13.52 billion in the first two months of the year.
This was even as the total domestic transactions stood at N339.49 billion in the period under review.
According to the Domestic and Foreign Portfolio Investment report released by the NGX for February 2023, foreign inflows for the month of February stood at N3.68 billion – the lowest level since 2013. Coupled with January’s figure of N9.84 billion, this meant that the inflows stood at N13.52 billion. Also, outflows for the month under review stood at N15.94 billion as against N15.06 billion.
According to the report, total transactions at the nation’s bourse decreased by 3.17 per cent from N195.10 billion (about $422.94 million) in January 2023 to N188.91billion (about $409.72 million) in February 2023. However, the performance of the current month when compared to the performance in February 2022 (N183.56 billion) revealed that total transactions increased by 2.91 per cent.
Similarly, the total value of transactions executed by domestic investors outperformed that by foreign investors by 80 per cent.
Further analysis of the report revealed that total transactions executed between the current and prior month (January 2023) revealed that total domestic transactions decreased by 0.53 per cent from N170.20 billion in January to N169.29 billion in February 2023.
However, total foreign transactions decreased more significantly by 21.20 per cent from N24.90 billion (about $53.98 million) to N19.62 billion (about $42.51 million) between January 2023 and February 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 N616bn 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.
The transaction data report showed that the total domestic transactions stood at N339.49 billion, whilst total foreign transactions stood at N44.52 billion.
Reacting to the report, analysts at Cordros Research, said the decline in foreign inflows was due to the lingering FX liquidity constraints, elections uncertainties and high global interest rates.
“We expect domestic investors to continue to dominate the domestic equities market over the short-to-medium term, even as higher FI yields may constrain buying activities.
Also, FPIs who have exhibited a lacklustre interest in domestic equities are likely to remain on the sidelines due to elevated global uncertainties, sustained FX liquidity challenges, and tightening global financing conditions”, they said.
