Foreign Portfolio Inflows Outweigh Outflows in Q3 2018 Despite U.S Higher Yields

Proshare

Tuesday, November 06, 2018 05:05 PM / Proshare Research

 

Despite increased investment opportunities in developed nations, particularly the United States (U.S), which triggered recent divestment of portfolio assets by Foreign Portfolio Investors (FPI) from Nigeria’s stock market, the country recorded higher inflows of foreign investment into the country compared with investment outflows in the third quarter of 2018.

 

An analysis of monthly transactions of domestic and foreign portfolio participation in equity trading for September 2018 by the Nigerian Stock Exchange (NSE) showed that the nation recorded N97.03 billion worth of portfolio investment inflows into the nation’s stock market between July and September 2018, while a total of N94.43 billion was withdrawn by the foreign investors within the same period.

 

Further analysis also revealed that foreign portfolio investment outflows from the country during this period was its lowest levels in fourteen (14) months; dipping by 70 percent from N54.45 billion in June to N16.34 billion in July, 2018.

 

The development followed a hike in the U.S Fed Reserve from 1.75 percent in May 2018 to 2.00 percent in June 2018.

 

Consequently, foreign outflows, which dipped in July, rose by 110 percent to N34.31 billion in August and recorded a further increase of 28 percent to N43.78 billion in September, 2018.

 

On the other hand, foreign inflows, which fell by 59 percent to N19.83 billion in July, increased to N36.66 billion in August and N40.54 billion in September, 2018.

 

This implies that while some foreign portfolio investors were leaving emerging markets all over the world, including Nigeria; for the U.S. economy to take advantage of higher yields, many others considered Nigeria for investment within the period under review.

 

That said, total transactions at the bourse dropped to N410.1 billion in the third quarter from the N718.3 billion and N878.97 recorded in the second and first quarter of 2018 respectively.

 

This was largely driven by persistent drop in the value of transactions by domestic investors from a total of N497.15 billion in the first quarter of 2018 to N218.64 billion in the third quarter of 2018.

 


Proshare Nigeria Pvt. Ltd.


Key:      F= Foreign

              D=Domestic

 

 

Proshare Nigeria Pvt. Ltd.

 

 

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