Stock market investors withdraw N61.67bn in one month

Foreign and domestic investors in the nation’s stock market pulled out a total of N61.67bn in January, the Nigerian Stock Exchange said recently.

The NSE said foreign and domestic investors withdrew N39.04bn and N22.63bn respectively from the market in the month while a total of N60.42bn was injected into the market.

Outflow includes sales transactions or liquidation of portfolio investments through the stock market, while inflow includes purchase transactions on the NSE (equities only), according to the data.

The concerns over the general elections and rising interest rate in the United States and some other developed economies had resulted in the exit of foreign investors from the NSE in recent months.

In January,  foreign investors pulled out N642.65bn from the stock market last year, compared to the N435.31bn withdrawn in 2017, citing data from the NSE.

The NSE’s latest domestic and foreign portfolio investment report, which was released on Monday, showed that total transactions at the nation’s bourse reduced by three per cent to N122.08bn (about $398.8m) in January from N125.86bn in December 2018.

According to the report, the market performance in January, when compared to its performance in the same period in 2018 revealed that total transactions reduced by 69.05 per cent.

The bourse said, “In January 2019, the total value of transactions executed by foreign investors outperformed those executed by domestic investors by 10 per cent.

“A further analysis of the transactions executed in the current and prior month (December 2018) revealed that total foreign transactions increased by 11.27 per cent from N60.08bn in December 2018 to N66.85bn in January 2019.”

The NSE said foreign outflows also increased by 5.20 per cent from N37.11bn in December to N39.04bn in January while foreign inflows rose by 21.07 per cent from N22.97bn to N27.81bn.

It said the value of the total transactions executed in the domestic market by retail investors’ outperformed institutional investors by eight per cent.

The bourse said, “A comparison of the current and prior month (December 2018) transactions revealed that the total retail transactions increased by 6.27 per cent from N27.91bn in December 2018 to N29.66bn in January 2019. The institutional composition of the domestic market reduced significantly by 32.45 per cent from N37.87bn in December 2018 to N25.58bn in January 2019. This indicates higher participation by retail investors’ over their institutional counterparts in January 2019.”

According to the report, between 2011 and 2015, foreign transactions consistently outperformed domestic transactions but domestic transactions marginally outperformed foreign transactions in 2016 and 2017 and remained almost on the par in 2018.

It said, “Foreign transactions, which stood at N1.539tn in 2014, declined to N1.219tn in 2018. Over the 12-year period, domestic transactions decreased by 66.68 per cent from N3.556tn in 2007 to N1.185tn in 2018.

“Total foreign transactions accounted for about 51 per cent of the total transactions carried out in 2018, while domestic transactions accounted for about 49 per cent of the total transactions in the same period.”

The Chief Executive Officer, NSE, Mr Oscar Onyema, at the 2018 Market Recap and Outlook for 2019 in January, noted that the rise in foreign outflows “highlights attenuated foreign participation due to a shift to higher-yielding assets with lower risks in developed countries, coupled with the impending political risks in the coming Nigerian elections.”