In spite of the multiple income streams made available from the participation in equities trading, the contribution of investors both foreign and domestic on the Nigerian Stock Exchange has continued to dwindle.
Most recent Domestic and Foreign Portfolio participation report (August), made available by the Nigerian Stock Exchange (NSE) shows that total transactions from January to August 2016 decreased by 41.82 percent from N1,430.51 billion recorded within the same period in 2015 to N832.31 billion in 2016.
According to the report, in the last one year foreign portfolio transactions on the NSE has fallen by 52 percent from N777.6 billion to 369.6 billion, while domestic portfolio participation has dropped by 29 percent from N652.9 billion to N462.8 billion.
Reports from the capital market claims that other African exchanges are beginning to record foreign inflows at the expense of the Nigerian stock market, which has seen reduced trading on the back of scarcity of foreign exchange and unstable macroeconomic environment
Notwithstanding, the monthly report which polls trading figures from major custodians and market operators on their foreign portfolio investments (FPI) showed that Total transactions at the nation’s bourse increased Month-on-Month by 30.51 percent from N90.19 billion recorded in July 2016 to N117.71 billion (about $0.39 billion) in August 2016.
Also, domestic investors marginally outperformed their foreign counterparts by about 4.76 percent. Domestic transactions increased by 34.28 percent from N45.91 billion in July 2016 to N61.65 billion in August 2016.
A breakdown of the domestic composition transaction showed that the institutional composition of the domestic market increased by 53.35 percent from N24.95 billion in July to N38.26 billion in August. The retail composition increased by 11.59 percent from N20.96 billion in July to N23.39 in August. Institutional investors significantly outperformed their retail counterparts in the period under review.
Meanwhile, FPI transactions increased by 26.60 percent from N44.28 billion in July 2016 to N56.06 billion in August 2016. Monthly foreign inflows outpaced outflows as foreign inflows increased by 48.10 percent from N23.43 billion in July to N34.70 billion in August 2016. Foreign outflows also increased by 2.45 percent from N20.85 billion to N21.36 billion within the same period.