By Chukwuma Umeorah
Foreign Portfolio Investments on the Nigerian Exchange Limited (NGX) in February 2024 rose by 23.95 per cent to N65.81 billion from N53.11 billion in the previous month. This increase comes despite a 45.07 per cent decrease in total transactions on the nation’s bourse, which fell from N651.52 billion in January to N357.88 billion in February.
This was contained in NGX’s “Domestic & Foreign Portfolio Investment Report,” which provides a comprehensive analysis of equity participation and significant shifts in market dynamics.
Foreign transactions for January and February 2024 stood at N118.92 billion, compared to the N44.52 billion recorded for the same period in 2023. Inflow accounted for N40.71 billion, while Outflow accounted for N78.21 billion in the same period of time.
Despite foreign investors displaying heightened interest in Nigerian equities, domestic transactions dominated, accounting for a substantial portion of the market activity. In February 2024, total domestic transactions amounted to N890.48 billion, representing approximately 88.22 per cent of the total transactions for the period, while foreign transactions totaled N118.92 billion, representing the remaining 11.78 per cent.
Further analysis unveils a shift in the composition of domestic transactions, with retail investors exhibiting a significant decrease in participation compared to institutional investors.
Retail transactions decreased by 43.29 per cent, declining from N285.58 billion in January 2024 to N161.94 billion in February 2024. Meanwhile, institutional transactions experienced a reduction of 58.40 per cent, dropping from N312.83 billion to N130.13 billion during the same period.
Anticipating a positive trajectory, analysts foresee further growth in foreign portfolio investments (FPI) following assurances from the Central Bank Governor, Olayemi Cardoso, on addressing distortions in the foreign exchange market and prioritizing the development of a functional FX market with robust supply to bolster investor confidence and attract more foreign capital into Nigeria’s equity market.