November 12, 2018

Foreign investors raise stake in NSE as FPI rises 133% in 2 months

Stockmarket, week


By Nkiruka Nnorom

DESPITE the heightened political tension in the country ahead of the 2019 general election and increasing yield in the United States of America, which have necessitated sell-off in the Nigerian stock market in the last few months, foreign investors seem to be raising their stake in the equity market as foreign portfolio investment, FPI, which has been wobbling since the beginning of year, has started an upward move.

Analysis of monthly domestic and foreign portfolio participation in the equity market for September 2018 showed that total FPI in the market rose by 133.15 percent in two months to September, 2018 to N83.33 billion from N36.17 billion in July.

Nigerian Stock Exchange

After recording a steep decline of 67.1 percent in July, the highest this year, foreign investors raised their stake in August with their participation increasing by 96.2 percent. The FPI again rose by 18.82 percent in August, bringing the total commitment by foreign investors to N155.3 billion within the two month period.

The total FPI accounted for 64.77 percent of the total transactions in the in the market and outperformed domestic investors by 29.54 percent in during the period.

On the other hand, total domestic transaction dipped by 27.03 percent to N45.87 billion from N62.87 billion in August.

Analysts opine that the development followed a hike in the U.S Fed Reserve from 1.75 percent in May 2018 to 2.00 percent in June 2018.

They observed that the increase in foreign portfolio investment implied that while some foreign portfolio investors were leaving emerging markets all over the world, including Nigeria, for the U.S. economy to take advantage of higher yields, many others considered Nigeria for investment within the period under review.