Foreign investors pulled out a total of N642.65bn from the nation’s stock market last year, compared to the N435.31 withdrawn in 2017, the Nigerian Stock Exchange said in a new report on Thursday.
The NSE said foreign inflows into the market fell to N576.45bn last year from N772.25bn in 2017.
Foreign portfolio investment outflow includes sales transactions or liquidation of portfolio investments through the stock market, while the FPI inflow includes purchase transactions on the NSE (equities only), according to the data.
The concerns over the forthcoming generation elections and rising interest rate in the United States and some other developed economies had resulted to the exit of foreign investors from the NSE in recent months.
The Chief Executive Officer, NSE, Mr Oscar Onyema, at the 2018 Market Recap and Outlook for 2019 on Monday, noted that the rise in foreign outflows “highlights attenuated foreign participation due to a shift to higher-yielding assets with lower risks in developed countries, coupled with the impending political risks in the coming Nigerian elections.”
The NSE Domestic and FPI Report for December showed that total transactions at the nation’s bourse reduced by 15.93 per cent from N149.72bn in November to N125.86bn in December.
It said the cumulative transactions reduced by 5.44 per cent to N2.404tn in 2018 from N2.542tn in the previous year.
The bourse said, “Domestic investors outperformed foreign investors by 4.54 per cent in December 2018. Total domestic transactions increased marginally by 0.64 per cent from N65.36bn in November to N65.78bn in December 2018.
“In contrast, total foreign transactions reduced by 28.78 per cent from N84.36bn to N60.08bn driven by a reduction in foreign inflows, which reduced by 34.31 per cent from N34.97bn to N22.97bn and foreign outflows, which reduced by 24.86 per cent from N49.39bn to N37.11bn over the same period.
The NSE said between 2011 and 2015, foreign transactions consistently outperformed domestic transactions but domestic transactions marginally outpaced foreign transactions in 2016 and 2017, and remained almost at par in 2018.
It said, “Also, foreign transactions, which were N1.539tn in 2014, declined to N1.219bn in 2018. Over a 12-year period, domestic transactions have decreased by 66.67 per cent from N3.556tn in 2007 to N1.185tn in 2018.
“The total foreign transactions accounted for about 51 per cent of the total transactions carried out in the financial year 2018 whilst the domestic transactions accounted for about 49 per cent of the total transactions in the same year.”
The volatility in capital flows, especially FPI, has been described as one of the downside risks to the nation’s macroeconomic outlook.
At their meeting in November, several members of the Monetary Policy Committee of the Central Bank of Nigeria expressed concerns over the continuous outflow of portfolio investments.