A total of N99.94bn was pulled out by foreign investors from the Nigerian stock market in the first four months of this year as foreign involvement plunged to a four-year low in April.
The foreign portfolio investors injected N 78.31bn into the market from January to April this year, according to data from the Nigerian Exchange Limited.
Foreign portfolio investment 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 bourse.
The NGX, in its latest domestic and foreign portfolio report, said foreign outflow fell to N9.82bn in April from N20.28bn in March.
Foreign investors withdrew N39.05bn in February, up from N30.79bn in January, according to the bourse.
Total transactions at the bourse decreased by 30.01 per cent from N228.49bn (about $560.55m) in March 2021 to N159.93bn (about $389.84m) in April 2021.
The total value of transactions executed by domestic investors in April outperformed transactions executed by foreign investors by about 64 per cent.
A further analysis revealed that total domestic transactions decreased by 29.78 per cent from N187.85bn in March to N131.91bn in April.
Total foreign transactions decreased by 31.05 per cent from N40.64bn (about $99.70m) in March to N28.02bn (about $68.31m) in April.
The NGX said the institutional Investors outperformed retail investors by 44 per cent in April, adding that retail transactions decreased by 66.37 per cent from N108.55bn in March to N36.50bn in April.
“However, the institutional composition of the domestic market increased by 20.32 per cent from N79.30bn in March 2021 to N95.41bn in April 2021,” it said.
Analysts at Cordros Capital Limited said the total value of foreign involvement in April was the lowest in four years, adding that this was induced by rising bond yields in the advanced economies amidst lingering foreign exchange illiquidity in the country.
They said, “Meanwhile, the weak domestic participation was driven by a 66.4 per cent month-on-month decline in retail investor’s participation which masked the 20.3 per cent m/m increase in institutional investors’ participation.
“We maintain our expectation of weak domestic and foreign investors’ participation on the local bourse in the near term due to sustained rise in yields in the fixed income space and lingering liquidity constraints in the FX market.”
The NGX said over a 14-year period, domestic transactions decreased by 59.54 per cent from N3.56tn in 2007 to N1.44tn in 2020 whilst foreign transactions increased by 18.45 per cent from N616bn to N729bn over the same period.
It said, “Total domestic transactions accounted for about 74 per cent of the total transactions carried out in 2020, whilst foreign transactions accounted for about 26 per cent of the total transactions in the same period.
“The transaction data for 2021 shows that total foreign transactions stand at circa N178.25bn, whilst total domestic transactions are about N658.21bn,” it added.