Despite COVID-19, NSE Attracts More Portfolio Investments

Total portfolio investment into Nigeria through the Nigerian Stock Exchange (NSE) as at first quarter of 2020 increased by 49 per cent over the value recorded in the same period in 2019.

Total investment (foreign and domestic) in the review period of 2020 stood at N626.9billion compared to N420.3billion in 2019 according to figures provided by the NSE in May.

Nigeria requires about 17 times the portfolio investment figure recorded by the NSE in March to fund its budget for 2020.

Domestic portfolio investment (retail and institutional) outwitted foreign portfolio investment (FPI) in the first quarter of 2020, contributing 59.8 per cent or about N375billion of the total value. Domestic institutional investors accounted for over 54 per cent or N203.5billion of domestic investment in the review period.

On the flip side, foreign portfolio investors accounted for about 40.2 per cent of the total value in the equities market as of March 2020 compared to about 53 per cent of total transaction in March 2019.

Breakdown of performance foreign and domestic portfolio investment as captured by the NSE between January and March showed the biggest chunk of investment so far was done in March with about N243billion investment recorded by both the foreign and domestic investors. February recorded the lowest value of the transaction in portfolio investment at N149billion compared to N236billion achieved in January.

The NSE FPI report showed that total transactions at the nation’s bourse increased by 84.03 per cent from N127.94 billion (about $417.41million) in December 2019 to N235.46 billion (about $767.23 million) in January 2020. The performance of the month when compared to the performance in the same period (January 2019) of the prior year revealed that total transactions increased by 92.87 per cent. In January 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by approximately 40 per cent.

Performance Review

Further analysis of the total transactions executed in January and prior month (December 2019) revealed that total domestic transactions increased by 154.86 per cent from N64.80 billion in December to N165.14 billion in January 2020. Similarly, total foreign transactions increased by 11.35 per cent from N63.14 billion (about $206million) to N70.32 billion (about $229.42 million) between December and January 2020.

The value of domestic transactions executed by Institutional investors outperformed retail investors by two per cent in January. A comparison of domestic transactions in the current and prior month (December 2019) revealed that retail transactions increased by 233.75 per cent from N24.47 billion in December 2019 to N81.67 billion in January 2020. Similarly, the institutional composition of the domestic market increased by 107.02 per cent from N40.32 billion in December 2019 to N83.47 billion in January 2020.

As at 29 February 2020, total transactions at the nation’s bourse decreased by 36.93 per cent from N235.46 billion (about $767.23million) in January 20195 to N148.50 billion (about $484.60 million) in February 2020. The performance of the current month when compared to the performance in the same period (February 2019) of the prior year revealed that total transactions decreased by 21.04 per cent. In February 2020, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa four per cent.

Further analysis of the total transactions executed between February and prior month (January 2020) revealed that total domestic transactions decreased by 53.27 per cent from N165.14 billion in January to N77.16 billion in February 2020. However, total foreign transactions increased marginally by 1.46% from N70.31 billion (about $229.42million) to N71.34 billion (about $232.79 million) between January and February 2020.

The value of domestic transactions executed by institutional investors outperformed retail investors by 24 per cent. A comparison of domestic transactions in the current and prior month (January 2020) revealed that retail transactions decreased by 63.81 per cent from N81.67 billion in January 2020 to N29.56 billion in February 2020. Similarly, the institutional composition of the domestic market decreased by 42.97 per cent from N83.47 billion in January 2020 to N47.60 billion in February 2020.

Over the a13-year period, domestic transactions decreased by 72.30 per cent from N3.556trillion in 2007 to N985billion in 2019 whilst foreign transactions increased by 53.08 per cent from N616billion to N943billion over the same period.

Total domestic transactions accounted for about 51 per cent of the total transactions carried out in 2019, whilst foreign transactions accounted for about 49 per cent 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 N141.65 billion whilst total domestic transactions YTD is about N242.30 billion.

As at 31 March 2020, total transactions at the nation’s bourse increased by 63.58 per cent from N148.50billion (about $484.60million) in February 2020 to N242.91billion (about $630.04million) in March 2020.

The performance of the current month when compared to the performance in March 2019 (N110.11billion) revealed that total transactions increased by 120.60 per cent. In March 2020, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by circa 10 per cent.

Further analysis of the total transactions executed between the current and prior month (February 2020) revealed that total domestic transactions increased by 71.97 per cent from N77.16 billion in February to N132.69 billion in March 2020. Also, total foreign transactions increased by 54.50 per cent from N71.34 billion (about $232.79million) to N110.22 billion (about $285.89million) between February and March 2020.

The value of domestic transactions executed by institutional investors outperformed retail Investors by 10 per cent. A comparison of domestic transactions in the current and prior month (February 2020) revealed that retail transactions increased significantly by 103.72 per cent from N29.56 billion in February 2020 to N60.22 billion in March 2020. Similarly, the institutional composition of the domestic market increased by 52.23 per cent from N47.60 billion in February 2020 to N72.46 billion in March 2020.