Foreign portfolio transactions in the Nigerian stock market dropped by N326.9 billion in the first half of this year, as foreign investors continued to trade more on the sell side than buy side.

Official report at the Nigerian Stock Exchange (NSE) obtained by The Nation indicated that total foreign transactions for the six-month period ended June 30, 2019 stood at N472.78 billion, a decline of 40.9 per cent from N799.70 billion recorded in the comparable period of 2018.

Alongside the steep decline in foreign transactions, foreign outflows continued to outpace inflows with net foreign portfolio investment (FPI) deficit rising from N38.41 billion in first half of 2018 to N42.84 billion in 2019.

Foreign inflows dropped from N380.65 billion in the first half of 2018 to N214.97 billion in the first half of 2019, while foreign outflows also declined from N419.06 billion in first half 2018 to N257.81 billion in first half 2019.

Three consecutive growths in transactions pivoted domestic investors atop the activities table for the first half of 2019 with 54.16 per cent of total transactions, compared with the situation in first half 2018 when foreign investors dominated with 50.07 per cent. Domestic investors accounted for total transactions of N614.73 billion in first half 2019 as against N472.78 billion recorded by foreign investors.

Total transactions at the equities market had dropped by N509.71 billion or 31.91 per cent from N1.597 trillion in first half 2018 to N1.088 trillion in first half 2019.

Domestic transactions had increased consecutively from N54.02 billion in March 2019 to N71.99 billion, N143.87 billion and N200.51 billion in April, May and June 2019 respectively. Domestic retail investors appeared to have been attracted by attractive share prices, displacing institutional investors to become the most dominant bloc of domestic investors. Domestic investors recoded total turnover of N329.69 billion as against N285.04 billion recorded by institutional investors in first half 2019. Domestic institutional investors had led in first half of 2018 with N483.65 billion against N313.84 billion recorded by domestic investors.

Low appetite for Nigerian equities had led to significant depreciation in share prices at the stock market. The Nation had reported that investors in Nigerian equities suffered average depreciation of 4.66 per cent in their portfolios during the first half of this year, equivalent to net loss of N546.2 billion during the six-month period.

Benchmark index for the Nigerian equities market had shown that Nigerian equities traded mostly on the negative during the period, declining in four out of the six months. The market also closed both the first and second quarters on the downside.

The All Share Index (ASI) – the main value-based index that tracks share prices at the NSE, closed June 2019 at 29,966.87 points, indicating average decline of 3.55 per cent, 3.46 per cent and 4.66 per cent for the month of June, the second quarter and half-year period respectively.

The ASI had opened 2019 at 31,430.50 points, 17.81 per cent down from its 2018’s opening index of 38,243.19 points. It had, however, rallied a world-leading gain of 42.30 per cent in 2017.

The FPI report, coordinated by the NSE, aggregated transactions from major custodians and capital market operators and it is widely regarded as a credible measure of the 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.

Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. Segmental analysis delineates the proportion of foreign to local participation, institutional to retail investors as well as the momentum of activities among others.

Nigeria suffered a net deficit of N26.6 billion in foreign portfolio transactions in the first quarter of this year amid fears of political and macro-economic uncertainties. The contry recorded a negative balance of N26.6 billion in inflow and outflow transactions by foreign portfolio investors in first quarter 2019 compared with a positive balance of N30.88 billion recorded in comparable period of 2018.

The report also showed that foreign portfolio transactions dropped by N159.95 billion in first quarter 2019, representing a decrease of 41.89 per cent from the turnover in first quarter 2018. Total foreign portfolio transactions dropped from N381.82 billion in first quarter 2018 to N221.87 billion in first quarter 2019.

Foreign outflows surpassed inflows in 2019 with the sellers accounting for N124.24 billion as against N97.63 billion by the buyers. In first quarter 2018, foreign inflows had outpaced outflows with N206.35 billion and N175.47 billion respectively.