Foreign portfolio inflows into Nigeria’s Stock Market surged to N93.37 billion in the first quarter of 2024, reflecting a remarkable 415% increase compared to the corresponding period in 2023.
This substantial upswing is evident in the Foreign Portfolio Investment data for the first quarter, as disseminated by the research department of the NGX.
However, when denominated in dollars, the actual inflow amounted to $70.1 million during the quarter, compared to $39.2 million in the same period of 2023.
The NGX adopted an exchange rate of N1330/$1 in the first quarter of 2024, a notable deviation from the N461.13/$1 rate applied in the first quarter of 2023.
During the first quarter of 2024, foreign portfolio investors injected $70.1 million into the market but also experienced an outflow of $90.03 million.
Consequently, a net forex outflow of $19.87 million ensued, a marked improvement from the net outflow of $37.8 million recorded in the same period last year.
March emerged as the month with the highest monthly foreign portfolio transactions, totaling approximately $70 million, while February and January witnessed transactions of $49.4 million and $39.9 million, respectively, cumulatively reaching $160.2 million (equivalent to N213.8 billion).
Despite the robust performance in Q1 2024, the total FPI transactions for Q1 2023, which amounted to $116.4 million, significantly trailed the $309 million recorded in 2022.
In 2019, prior to the onset of the COVID-19 pandemic and the ensuing economic downturn, total FPI transactions soared to as high as $724 million.
Further scrutiny of transactions executed between February and March 2022 revealed that total domestic transactions rose by 3.59%, from N138.13 billion to N143.09 billion. Conversely, total foreign transactions declined by 7.17%, from N45.43 billion (approximately $109.30 million) to N42.17 billion (about $101.36 million).
Moreover, institutional investors outperformed retail investors by 16%. A comparative analysis of domestic transactions in February and March 2022 illustrated a marginal decrease of 1.27% in retail transactions, from N61.39 billion to N60.61 billion.
Over a fifteen-year span, domestic transactions plummeted by 58.80%, from N3.556 trillion in 2007 to N1.465 trillion in 2021.
Similarly, foreign transactions witnessed a downturn, dropping by 29.38% from N616 billion to N435 billion over the same period.
In 2021, domestic transactions accounted for approximately 77% of the total, with foreign transactions comprising around 23%.
However, in 2022, domestic transactions totaled approximately N563.29 billion, while foreign transactions amounted to about N129.01 billion.
Despite prevailing challenges, foreign investor engagement in the Nigerian equities market has averaged below 15% since 2022, influenced by factors such as Nigeria’s exchange rate volatility, escalating interest rates in the United States, and global capital reallocation away from emerging markets.
Nevertheless, despite subdued foreign portfolio investor interest, the NGX has maintained its position as one of the top-performing stock exchanges in the first quarter of 2024.
As per NGX data, the NGX All Share Index has yielded a remarkable 38.9% year-to-date return, significantly surpassing the 5.82% return recorded in the same period in 2023.
From 2021 to 2023, the ASI consistently delivered robust year-to-date returns, including 50.03%, 6.07%, 19.98%, and 45.9%, respectively, with the majority of gains accruing to domestic investors who remain predominant in transaction flows.
