Nigeria records 21.6% foreign portfolio deficit amidst forex strain


Foreign portfolio investments (FPI) in Nigeria have continued to dwindle as latest investment report indicates that Nigeria recorded about 21.6 per cent foreign portfolio investment deficit in January 2016.

FPI report for January 2016 released yesterday by the Nigerian Stock Exchange (NSE) showed a deficit of 21.56 per cent between foreign inflow and outflow in January 2016, sustaining the same trend that had marked the 2015 business year.

Besides, the quantum of foreign investors’ transactions slowed down alongside a marked slowdown in the overall activities at the Nigerian equities market.

The FPI report showed that foreign inflow stood at N17.01 billion as against outflow of N26.36 billion, representing a deficit of N9.35 billion or 21.56 per cent during the period. Total foreign transactions thus stood at N43.37 billion. With the foreign sales on the high, foreign investors still accounted for the larger share of 51.57 per cent of transactions at the Nigerian stock market during the period.

Nigerian investors accounted for N40.73 billion or 48.43 per cent of the total turnover of N84.10 billion recorded during the period.

“Monthly foreign outflows outpaced inflows which was consistent with the same period in 2015,” the report stated. In December 2015, foreign inflow was N17.04 billion against outflow of N34.31 billion, representing a deficit of N17.27 billion.

In the comparable period of January 2015, foreign investors appeared less edgy and there were more appetite for Nigerian equities, although the tinge of deficit was also evident then. Foreign inflow was N48.03 billion in January 2015 as against outflow of N51.08 billion. Total foreign transactions thus stood then at N99.11 billion or 52.24 per cent of total turnover of N189.72 billion during the period. Domestic investors had accounted for N90.61 billion or 47.76 per cent of total transactions.

The FPI report, coordinated by the Nigerian Stock Exchange (NSE), uses two key indicators-inflows and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.

The NSE report is generally regarded as a credible gauge of foreign portfolio investments in Nigeria as it coordinates data from nearly all active and major investment bankers, stockbrokers, custodians and other capital market operators.

Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.

The 12-month foreign portfolio investment report for 2014 had shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion. In 2013, total foreign inflow stood at N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.