Friday, August 14, 2020
Domestic and Foreign Portfolio Participation in Equity Trading
On a monthly basis, The Nigerian Stock Exchange polls trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI)4 flows. As at 30 June 2020, total transactions at the nation’s bourse increased by 8.17% from N119.15billion (about $307.32million) in May 20205 to N128.88billion (about $333.25million) in June 20206. The performance of the current month when compared to the performance in June 2019 (N297.25billion) revealed that total transactions decreased by 56.64%. In June 2020, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 12%.
Analysis of Domestic and Foreign Transactions
A further analysis of the total transactions executed between the current and prior month (May 2020) revealed that total domestic transactions decreased by 13.55% from N83.91billion in May to N72.54 billion in June 2020. However, total foreign transactions increased by 59.88% from N35.24 billion (about $90.89million) to N56.34 billion (about $145.68million) between May and June 2020.
Figure 4 below shows that Institutional Investors outperformed Retail Investors by 10%. A comparison of domestic transactions in the current and prior month (May 2020) revealed that retail transactions decreased by 23.35% from N42.19 billion in May 2020 to N32.34 billion in June 2020. Whilst the institutional composition of the domestic market also decreased by 3.64% from N41.72 billion in May 2020 to N40.20 billion in June 2020.
Historical Analysis of Domestic and Foreign Transactions
Over a thirteen-year period, domestic transactions decreased by 72.30% from N3.556t in 2007 to N985bn in 2019 whilst foreign transactions increased by 53.08% from N616bn to N943bn over the same period.
Total domestic transactions accounted for about 51% of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49% of the total transactions in the same period.
The actual performance referenced 2020A (2020 Actual) shows that total foreign transactions carried out year till date (YTD) is about N396.63 billion whilst total domestic transactions YTD is about N606.91 billion.