NSE records 244.3 % FPI transaction increase in August

A report on Foreign Portfolio Investment (FPI) for the month of Aug-2017 recently published by the Nigerian Stock Exchange has revealed an increment in foreign investor appetite.

According to the report, Total market transactions from January to August surged 83.3% to N1.5tn compared N0.8tn in the same period in 2016.

Interestingly, FPI transaction jumped 244.3% from N60.5bn in July and YTD average of N141.5bn to N208.3bn in Aug-17 as foreign appetite for Nigerian equities increased significantly. As such, FPIs participation rate (52.5%) for the month of August exceeded domestic participation for the first time in 2017, slashing domestic participation rate to 47.5%.

Evidently, faster foreign inflows into equities, up 3.3x to N165.5bn in August, outpacing outflows which rose 1.9x to N42.9bn, accounted for the above.
Net inflows rose to its highest at N122.6bn, 7.5x more than N16.4bn Jul-17.

The report corroborates the sustained momentum in the Nigerian equities market, which currently outperforms global peers at +37.11% YTD and +3.97% MTD, amid improving macroeconomic variables and solid earnings expectation.

Meanwhile, a breakdown of the composition of transactions on the local bourse between January and August 2017 revealed that the institutional composition of the domestic market increased by 87.00% from N79.90 billion recorded in July to N149.41bn in August 2017, while, the retail composition decreased by 27.24% from N53.75bn to N39.11bn within the same period, indicating a higher participation by institutional investors over their retail counterparts.
Historical composition further shows that since 2011, foreign transactions have consistently outperformed domestic transactions, however, domestic transactions marginally outperformed foreign transactions in 2016, accounting for 55% of the total transaction volume in 2016.

Also, foreign transactions have further declined by 66.34% from N1.539t in 2014 to N518b in 2016, representing about 45% of total transactions in 2016.
Over the 9 year period, domestic transactions have significantly decreased by 85.43% from N3.556t in 2007 to N634b in 2016.

Adesola Afolabi