Total domestic and foreign portfolio investment (FPI) transactions as at 31 July 2020, decreased by 19.92% from N128.88 billion (about $333.25million) in June 2020 to N103.21 billion (about $265.55million) in July 2020.
This is according to the Nigerian Stock Exchange polls on trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows.
Compared with the corresponding month in the previous year, July 2019 (N113.47 billion), the performance of the current month indicated that total transactions decreased by 9.04%. In July 2020, the total value of transactions completed by Domestic Investors surpassed that of the total value of transactions completed by Foreign Investors by 32.98% as depicted in Figure 1 below.
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Figure 1: Domestic and Foreign Portfolio Investment
Analysis
In this instance, total transactions completed between the current, July and previous, June, month, 2020 indicated that total domestic transactions declined by only 5.40% from N72.54billion in June to N68.62 billion in July. However, total foreign transactions declined significantly by 38.60% from N56.34 billion (about $90.89million) to N34.59 billion (about $89.00million) between June and July 2020. Compared with the corresponding month in the previous period, total transactions completed indicated that total domestic transactions increased by 23.22% from N55.69 billion in July 2019 to N68.62 billion in July 2020. However, total transactions completed indicated that total foreign transactions decreased by 40.13% from N50.92 billion in July 2019 to N33.51 billion in July 2020.
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For domestic transactions, the analysis revealed that Institutional Investors outperformed Retail Investors by N3.54 billion. A comparison of domestic transactions in the current and prior month (June 2020) revealed that retail transactions increased moderately by 0.62% from N32.34 billion in June 2020 to N32.54 billion in July 2020; while the institutional composition of the domestic market decreased by 10.25% from N40.20 billion in June 2020 to N36.08 billion in July 2020.
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For foreign transactions, the analysis revealed that Institutional Foreign Outflow outperformed Foreign Inflow by N7.19 billion. A comparison of foreign transactions in the current and prior month (June 2020) revealed that both Foreign Inflow and Outflow decreased sharply by 45.79% (from N25.27 to N13.7 billion) and 32.76% (from N31.07 to 20.89 billion) respectively. Transactions increased moderately by 0.62% from N32.34 billion in June 2020 to N32.54 billion in July 2020; while the institutional composition of the domestic market decreased by 10.25% from N40.20 billion in June, 2020 to N36.08 billion in July, 2020.
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Over a six (6) year period, based on the data available, analysis indicated that domestic transactions decreased by 69.09% from N167.77 billion in July, 2014 to N68.62 billion in July, 2020; while foreign transactions decreased by 38.70% from N56.42 billion in July, 2014 to N34.59 billion in July, 2020. Total domestic transactions accounted for 66.49% of the total transactions carried out in July, 2020, while foreign transactions accounted for 33.51% of the total transactions in the same period.
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Key highlights
- Total domestic transactions completed year to date (YTD) is about N55 billion.
- Total foreign transactions completed YTD is about N22 billion.
- Foreign Inflow has decreased by 71.30% since the last rise in September, 2019.
- Foreign Outflow has decreased by 76.18% since the last rise in March, 2020.
- Domestic Retail has decreased by 45.97% since the last rise in March, 2020.
- Domestic Institutional has decreased by 50.21% since the last rise in March, 2020.
- Total domestic and foreign transactions have decreased by 57.51% since the last rise in March, 2020.
2019 was a bad year for the Nigerian stock market. 2020 was initially expected to be better and indeed started well before covid-19 lockdowns reminded foreign investors of the high vulnerability of this economy to oil price fluctuations. Now, with many US and tech stocks breaking all forms of resistance levels and with the massive interest in cryptos, foreign investors may not be in a hurry to return to Nigeria, except there’s an unexpected burst elsewhere.I think this is the right time for Local institutional investors to play more role in the local bourse.