Value of transactions at the Nigerian Stock Exchange (NSE) as at third quarter ended September 30, 2013 showed that foreign investors held 50.8 percent stakes to overtake local equities investors who staked 49.19 per cent.
Of the total N1.58 trillion worth of transactions, foreign Portfolio Investments (FPI) at the equities market accounted for N801.25 billion while domestic transactions were valued at N775.77 billion in the period under review.
This implies that domestic transactions at the NSE which hitherto exceeded foreign participation declined by a slim margin.
The breakdown according to the bourse official website disclosed that FPI transactions which started at 36.9 per cent at the beginning of the year, increased to 49.9 per cent at the end of September 2013 representing an increase of 13 per cent.
Domestic transactions on the other hand decreased from 63.1 per cent at the beginning of the year to 50.1 per cent at the end of Q3, representing a reduction of 13 per cent.
Further details from NSE showed that between January and March 2013, the foreign transactions totaled N217.57billon, representing 27.2 per cent of the N801.25billon worth of transactions recorded in the first three months of the year.
For the second quarter of 2013, a total of N365.07billon worth of FPI was recorded, while for the month of June had recorded the highest, amounting to N150.24billiion.
The total foreign transactions in equities stood at N218.64billon, representing 27.3 per cent increase in the third quarter of 2013.
Analysts at the Exchange attributed the growth in FPI to stability in the equities and fundamentals in some multinational stocks that most of the domestic investors cannot avoid to trade.
This, according to them is a signal that investors globally are interested in Nigerians equities market and domestic investors must utilize the opportunities created by the capital market in terms of wealth creation.
Chief Executive Officer, Lambeth Trust, Mr. David Adonri said, “The increase in FPI transactions in the Nigerian Capital Market is as a result of the carry over trade fueled by US Fed's quantitative easing.”
He noted that the discontinue quantitative easing by United States had threatenedequities markets worldwide including Nigeria slowed down and such might create an instability scenarioin the Market should foreign investors pull out massively.
“However, there is a shock absorber inform of Market Making in Nigeria that is on standby to intervene like was done recently,” Adonri added.
Capital Market/Research analyst at Capital Bancorp Plc, Mr. Oluleye Ademola said foreign investors are following the good outlook of the nation’s capital market and economy, considering the fundamental outlook of transformations that both sectors had witnessed.
He noted that the capital market is a free market and most domestic investors cannot avoid buying high cap stocks that are listed on the Exchange.
Speaking further, Mr. Ademola said: “Most Nigerians are still skeptical about the capital market. Does Nigerians have what it takes to be in the capital market? Foreigners have seen the potential in our market and they are trying to take advantage.
“However, you do not expect them to stay in the market forever. FPI transaction at the market is for a short-time period and once there is any globally scenario, they move their portfolio to another jurisdiction.”
Also speaking to our correspondent, the Managing Director of Investors & Trust Co Ltd, Mr. Jonathan Ojumu disclosed that reduction in domestic transactions is due to seasonal activities and foreign investors’keen interest in the nation’s capital market.
According to him,“Foreign investors are taking keen interest in our market and the volume they transacts on daily basis is far beyond what domestic investors are trading.
“The year is running to an end and there is need for cash by domestic investors for many things. Most of them now are selling not buying .Don’t forget that the capital market is for a long-term investors and for those who have the extra funds to invest in the market,”Ojumu explained.
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