Foreign portfolio investment (FPI) outflows from the country’s stock market rose by 124.7% percent in May 2018, with the market capitalisation of listed equities losing N1.146 trillion as it fell to N13.802 trillion.
In the Domestic & Foreign Portfolio Participation in Equity Trading for the Month of May released by the Nigerian Stock Exchange, it noted that there was a 3.45 percent decrease in foreign inflows to N62.06 billion in May from N64.28 billion in April. While the foreign outflows increased from N58.25 billion in April to N130.89 billion in May 2018.
What the FPI means
The FPI outflow includes sales transactions or liquidation of portfolio investments through the stock market, while the FPI inflow includes purchase transactions on the NSE (equities only), according to the report.
The surge in foreign outflow can be largely attributed to uncertain political climate as the country’s general election draw closer.
However, the total transactions at the equities market increased by 49.96 percent from N212.23 billion recorded in April to N318.27 billion in May.
The five-month report also showed that the cumulative transactions from January to May increased by 97.13 percent to N1.409 trillion in 2018 compared with N714.99 billion recorded in the same period of 2017.
The report also shows that institutional composition of the domestic market increased by 97.87 percent from N46.51 billion in April to N92.03 billion in May. The retail composition, however, declined by 22.92 percent from N43.19 billion in April to N33.29 billion in May.
The month-on-month analysis had shown a positive trend in net foreign investment inflow throughout the first quarter of 2018. Foreign inflow totalled N91.75 billion in January 2018 as against outflow of N74.64 billion. Foreign inflow and outflow stood at N44.89 billion and N38.33 billion respectively in February 2018 while foreign inflow and outflow recovered to N69.71 billion and N62.50 billion respectively in March 2018.
Total transactions at the Nigerian equities market in first quarter 2018 stood at N878.97 billion compared to N454.48 billion recorded in first quarter 2017. Nigerian domestic investors had accounted for N497.15 billion in first quarter 2018 as against N243.42 billion in comparison with same period of 2017.