Foreign and domestic participation in equities trading at the Nigerian Stock Exchange (NSE) suffered significant decline of 40.59 per cent in the first nine months of the year.
The latest report of domestic & foreign portfolio participation in equity trading, September 2016 on the NSE stated that the total transactions from January to September 2016 decreased significantly by 40.59 per cent from N1.56 trillion to N927.08 billion in September, 2016.
On a monthly basis, the Nigerian Stock Exchange (NSE) polls trading figures from major custodians and market operators on their foreign portfolio investment (FPI) flows.
Also, the total transactions at the nation’s bourse decreased by 19.49 per cent from N117.71 billion recorded in August 2016 to N94.77 billion in September 2016.
According to NSE, “We observed that both foreign and domestic activities are decreasing, however the foreign activity is decreasing faster.
“Domestic investors outperformed their foreign counterparts by about eight per cent. Domestic transactions decreased by 16.98 per cent from N61.65 billion in August 2016 to N51.18 billion in September 2016. Foreign Portfolio Investment (FPI) transactions decreased by 22.24 per cent from N56.06 billion in August 2016 to N43.59 billion in September 2016.
“Monthly foreign inflows outpaced outflows as foreign inflows decreased by 29.65 per cent from N34.70 billion in August to N24.41 billion in September 2016. Foreign outflows also decreased by 10.21 per cent from N21.36 billion to N19.18 billion within the same period,” the report stated.
Stock market analysts have said going by this data, NSE and the Securities and Exchange Commission (SEC) need to do more in deepening the participation of retail investors in the Nigerian stock market as foreign participation continues to decline.
They noted that the nation’s capital market has recorded unprecedented lull due to volatile forex and macro-economic concerns, saying, “The market experienced sustained volatility as investors’ exited positions and speculators went bargain-hunting.”
Managing director of Highcap Securities Limited, Mr David Adnori, said that the decision by the Monetary Policy Committee(MPC) of the Central Bank of Nigeria (CBN), to increase the benchmark rate from 12 per cent to 14 per cent per annum had been having perverse impact on the Nigerian stock market.He observed that except a proper guidance was provided on the nation’s foreign exchange policy guidelines, investors would continue their “wait and look” stance on the Nigerian economy.