The country’s macroeconomic challenges, especially the prolonged insecurity and foreign exchange (FX) shortage, have continued to stifle foreign portfolio investment (FPI) as participation in the last 12 months of 2023 closed at N410.6 billion, a mere 13 per cent of N3.2 trillion recorded by domestic investors in the period.
The December edition of the Nigerian Exchange (NGX) report on domestic and foreign portfolio participation in equities trading showed that total domestic transactions stood at N3.167 trillion, representing 89 per cent in the 12 months of trading while total foreign transactions was N410.6 billion.
A comparison of domestic transactions in December and November revealed that retail transactions decreased by 1.21 per cent from N92.8 billion in November to N91.6 billion in December 2023.
The institutional composition of the domestic market increased by 49.7 per cent, from N136.5 billion in November to N204.4 billion in December.
A further analysis of the total transactions revealed that total domestic transactions increased by 29.1 per cent from N229.3 billion in November to N296 billion in December.
However, total foreign transactions decreased by 32.9 per cent from N71.4 billion (about $75.76 million) to N47.9 billion (about $53.26 million) in the two months.
As at 31 December 2023, total transactions at the nation’s bourse increased by 14.38 per cent from N300.7 billion (about $319.15 million) in November 2023 to N343.9 billion (about $382.59 million) in December 2023.
Also, the performance of December when compared to the performance in December 2022 revealed that total transactions increased by 144.4 per cent.
In December 2023, the total value of transactions executed by domestic Investors outperformed transactions executed by foreign investors by a wide margin.
Over 16 years, domestic transactions decreased by 10.9 per cent from N3.6 trillion in 2007 to N3.2 trillion in 2023 whilst foreign transactions also decreased by 33.3 per cent from N616 billion to N411 billion over the same period.
Vice President of Highcap Securities, David Adonri, said declining FPI in Nigeria is not surprising. He said: “For several years, Nigeria’s sovereign rating has been negative due to insecurity and trapped foreign investors’ funds or capital control.
“To restore foreign investors’ confidence, security must be normalised, trapped funds released by the Central Bank of Nigeria (CBN) and the FX market must be transparently organised.”
