Domestic and Foreign Portfolio Participation in Equity Trading - January 2019

Thursday, March 21 2019 / 09:14 AM / NSE  

Analysis of Transactions For The Month (Jan’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 31 January 2019, total transactions at the nation’s bourse reduced by 3.00% from N125.86 billion recorded in December 2018 to N122.08 billion (about $398.8 million)3 in January 2019.

The performance of the current month when compared to the performance of the same period (January 2018) in the prior year revealed that total transactions reduced by 69.05%.

Total transactions include transactions by domestic and foreign investors, domestic investors are further categorized into Retail and Institutional investors. In January 2019, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 10.00% as shown in figure 1.

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

A further analysis of the transactions executed in the current and prior month (December 2018) revealed that total foreign transactions increased by 11.27% from N60.08 billion in December 2018 to N66.85 billion in January 2019. Foreign outflows also increased by 5.20% from N37.11 billion to N39.04 billion with a corresponding increase in foreign inflows which increased by 21.07% from N22.97 billion to N27.81 billion between December 2018 and January 2019.

Analysis of Domestic Transactions

The value of the total transactions executed in the domestic market by retail investors’ outperformed Institutional investors by 8.00% as illustrated below. A comparison of the current and prior month (December 2018) transactions revealed that the total retail transactions increased by 6.27% from N27.91 billion in December 2018 to N29.66 billion in January 2019. The Institutional composition of the domestic market reduced significantly by 32.45% from N37.87 billion in December 2018 to N25.58 billion in January 2019.

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

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.

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.

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