There has been a negative spike in foreign portfolio transactions this year, with more funds moving out than coming in, according to the latest foreign portfolio investment report by the Nigerian Stock Exchange (NSE).
The maiden foreign portfolio investment (FPI) report in the year tracked the outflow and inflow of foreign investments at the stock market in January and compared these with January, last year and preceding period in December,last year.
The NSE’s foreign portfolio investment report indicated that while foreign investors were relatively active in January compared with January, last year and last December, their transactions were mostly on the sell side rather than buy side.
The report used two key indicators – inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy. Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.
According to the report, total foreign outflow was N50.14 billion in January as against inflow of N39.53 billion during the period, bringing total foreign transactions to N89.67 billion. In January, last year, foreign inflow was higher at N40.96 billion against outflow of N20.50 billion.
The report underlined increased foreign participation, though negative. Foreign investors accounted for 49.28 per cent of total transaction value of N181.97 billion in January 2014 as against 36.89 per cent of total transactions of N166.60 billion in January, last year and 48.91 per cent of total transactions of N142.24 billion in December 2013.
Portfolio flow analysis in recent period had shown a consistent trading pattern in foreign transactions. While foreign investors flowed in more funds than they took out in the first half of last year, they have since been taking more money out than they invested since the beginning of the second half of last year.
Monthly analysis showed that total foreign transactions closed December 2013 at N69.57 billion, consisting of inflow of N32.40 billion and outflow of N37.17 billion. Total foreign transactions rose to N88.89 billion in November, including inflow of N42.68 billion and outflow of N46.21 billion. These had closed October at N82.33 billion including inflow of N39.45 billion and outflow of N42.88 billion.
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Let them keep selling. We keep buying as much as we can afford.