October 16, 2012
New Methodology for Calculating Foreign Portfolio Participation in Equity Trading At the NSE
On a monthly basis, the Exchange polls trading figures from major custodians and market operators on their foreign portfolio clients. The table below shows the breakdown of the portfolio inflow and outflow between 2007 and 2012.
Table 1: Flow of Foreign Portfolio Investments on the Nigerian Stock Market
A comparison of the total flows with the transactions on the Nigerian stock market is as shown in table 2 below:
Table 2: Comparison of Total Foreign Flows with Stock Market Transactions (N)
N.B. Stock Market Transactions is defined to include Purchases and Sales
Table 3: Comparison of Total Foreign Flows with Stock Market Transactions ($Billion)
The table showed that FPI flow, which stood at 15% in 2007 consistently increased over the years to stand at 67% in 2011. However, between January and August 2012, we observed that domestic investors have increased their share of the market from 33.2% in 2011 to 37.3% in 2012. Domestic investors can be categorized into either institutional or retail investors.
How does the Current Analysis Differ from the Previous Figure Released In January 2012, the exchange reported that foreign investors accounted for 81% of total inflows (purchases) on the market during 2011. During the same year, foreign investors accounted for 53% of total outflows (sales) recorded on the market. Consequently, total transactions by foreign investors were N847.9 billion or 67% out of total transaction of N1.3 trillion.