Domestic investment on the floor of the Nigerian Exchange (NGX) Limited grew to N526.30 billion in the first quarter (Q1) of the year, outperforming its foreign counterparts.
According to ‘the Domestic and Foreign Portfolio Investment (FPI) report for March, 2021,’ the total transactions at the nation’s bourse amounted to N676.53 billion, with domestic investors dominating by 77.79 per cent, while foreign investors pulled N150.23 billion or 22.21 per cent in Q1.
The FPI report, coordinated by the Nigerian Stock Exchange (NSE), included transactions from nearly all custodians and capital market operators and it is widely regarded as a credible measure of FPI trend. The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market, as a barometer for the economy.
Outflow includes sales transactions or liquidation of equity portfolio investments while inflow includes purchase transactions. While inflows and outflows indicate direction of portfolio transactions, total FPI measures the momentum and level of participation.
The data further showed that domestic institutional investors outperformed domestic retail investors. A comparison of domestic transactions in the period under review revealed that institutional composition of the domestic market pulled transaction worth of N296.51 billion, while retail transactions amount to N229.79 billion.
Breakdown of the FPI transactions in Q1 2021 showed that foreign investors pull out N90.12 billion, while the foreign portfolio inflows stood at N60.11 billion. Monthly review of the foreign investors’ outflow showed that in January, investors pull out N30.79 billion, in February, N39.05 billion, while in March, N20.28 billion.
Meanwhile, for the period under review, the overall market performance measure, All-Share Index (ASI), which tracks the general market movement of all listed equities on the Exchange, declined by 1,225.59 points or 3.04 per cent to close at 39,045.13 points on March 31, 2021 as against 40,270.72 points on January 4, 2021.
Capital market analysts noted that local investors are increasingly pitching their tent in equities market as against their foreign counterpart, saying, the development is good for the local bourse, as it will restore credibility and stability in the market, which was hitherto marred by volatility occasioned by the activities of foreign investors.
A stockbroker with Calyxt Securities Limited, Tunde Oyediran, said: “it is a good thing that domestic interest is building in the market; it is really positive.