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Domestic and Foreign Portfolio Participation in Equity Trading - February 2019

Capital Market	4105 VIEWS
Capital Market
4105 VIEWS

Friday, March 22 2019 / 02:12 PM / NSE

Analysis of Transactions For The Month (Feb’19)

On a monthly basis, The Nigerian Stock Exchange polls trading figures from market operators on their Foreign Portfolio Investment (FPI)2 flows.

As at 28 February 2019, total transactions at the nation’s bourse increased by 54.06% from N122.08 billion recorded in January 2019 to N188.08 billion (about $613.9 million)3 in February 2019.

The performance of the current month when compared to the performance of the same period (February 2018) in the prior year revealed that total transactions reduced by 11.30%.

These total transactions were executed by domestic and foreign investors, domestic investors are further categorized into retail and institutional investors.

In February 2019, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 6.00% as shown in figure 1.

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Analysis Of Domestic And Foreign Transactions For The Month (Feb’19)

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A further analysis of the transactions executed between the current and prior month (January 2019) revealed that total foreign transactions increased by 48.00% from N66.85 billion in January 2019 to N98.94 billion in February 2019.

There was a significant increase in foreign outflows which increased by 97.80% from N27.81 billion to N55.01 billion and foreign inflows which increased by 91.24% from N22.97 billion to N43.93 billion between January and February 2019.

Analysis of Domestic Transactions

The value of the total transactions executed in the domestic market by institutional investors’ outperformed retail investors by 8.00% as illustrated below.

A comparison of the current and prior month (January 2019) transactions revealed that the total retail transactions increased by 38.26% from N29.66 billion in January 2019 to N41.01 billion in February 2019.

The institutional composition of the domestic market also increased significantly by 88.15% from N25.58 billion in January 2019 to N48.13 billion in February 2019.

This indicates a higher participation by institutional investors’ over their retail counterparts in February 2019.

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The foreign and domestic trend shown in figure 7 below, highlights the performance of the market over the last decade. Between 2011 and 2015, foreign transactions consistently outperformed domestic transactions. However, domestic transactions marginally outperformed foreign transactions in 2016 and 2017, and remained almost at par in 2018.

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Foreign transactions which stood at N1.539t in 2014 declined to N1.219t in 2018. Over the twelve (12) year period, domestic transactions decreased by 66.68% from N3.556t in 2007 to N1.185t in 2018.

Total foreign transactions accounted for about 51% of the total transactions carried out in 2018, whilst domestic transactions accounted for about 49% of the total transactions in the same period.