Emmanuel OchayiForeign transactions on the Nigerian Exchange Limited soared by 113.94% to N71.37 billion (approximately $75.76 million) in November, marking a notable rebound compared to the preceding month’s N33.36 billion.
This spike, as revealed in the latest Domestic and Foreign Portfolio Investment Report for November published by the Nigerian Exchange Limited, indicates a resurgence in foreign participation within the country’s capital market.
“The substantial increase in foreign transactions between October and November 2023 reflects a promising trend,” stated the report.
“We’ve observed a 113.94% surge in foreign transactions, demonstrating renewed interest and confidence in the Nigerian market.”
This surge comes amid a backdrop of consistent dwindling foreign participation in the Nigerian capital market, exacerbated by the adverse effects of the COVID-19 pandemic in 2020.
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Previous data showcased a downward trajectory, with total domestic transactions valued at N2.454 trillion, starkly contrasting the approximately N258.02 billion worth of total foreign transactions recorded as of September 2023.
However, the most recent figures from the NGX depict a substantial upturn, illustrating a surge in total foreign transactions to N363 billion by November, while total domestic transactions stood at N2.871 trillion, signifying a positive shift in market dynamics.
Yet, despite the surge in foreign transactions, a closer look reveals that outflows continued to surpass inflows. The report highlighted that as of November 2023, foreign inflows amounted to N157.32 billion, trailing behind outflows totaling N205.43 billion.
Notably, November recorded the highest inflow at N34.77 billion, while the lowest was reported in April at N3.67 billion.
An analysis of the market trend for November 2023 disclosed a 34.08% increase in total transactions at the nation’s bourse, surging from N220.94 billion in October to N300.67 billion.
Year-on-year, this represented a 188.33% increase compared to November 2022’s figure of N104.28 billion.
Further insights from the report indicated a noteworthy trend in the performance of various investor categories. Domestic investors outpaced foreign investors by approximately 52% in total transaction value for November.
Institutional investors also outperformed retail investors by 20%, showcasing a robust performance in the domestic market.
The historical market trend over 16 years revealed a 45.30% decrease in domestic transactions, plummeting from N3.556 trillion in 2007 to N1.945 trillion in 2022.
Simultaneously, foreign transactions also experienced a downturn of 38.47%, decreasing from N616 billion to N379 billion over the same period.
In 2022, domestic transactions accounted for about 84% of the total transactions, with foreign transactions constituting the remaining 16%. This data underscores the evolving dynamics within Nigeria’s capital market and the marked resurgence in foreign investor interest, heralding potential positive shifts in the market’s trajectory moving forward.
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