Nigeria’s stock exchange records foreign outflow hits N52.37bn as equities transactions dip 37%

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Employees work on the trading floor at the Nigerian Stock Exchange (NSE) in Lagos, Nigeria, on Tuesday, April 2, 2019. The International Monetary Fund said Nigerias economy was growing too slowly to reduce poverty or joblessness and urged the government to boost revenue and scrap its system of multiple exchange rates. Photographer: Ruth McDowell/Bloomberg via Getty Images

The Nigerian Stock Exchange (NSE) data on domestic and foreign portfolio investment report for February 2020, has revealed that foreign outflows rose by N52.37 billion amid the novel coronavirus (COVID-19) currently rocking economies globally.

This was even as the total transactions at the nation’s bourse dropped by 36.93 per cent from N235.46 billion (about $767.23 million) in January 2020 to N148.50 billion (about $484.60 million) in February 2020. The NSE Domestic and Foreign Portfolio Investment Report is prepared on a monthly basis, with trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows.

The report stated that foreign inflow for the month under review amounted up to N18.97 billion compared with N23.81 billion recorded in January 2020, while foreign outflow for the month of February was N52.37 billion as against N46.50billion in January 2020, representing a 12.6 per cent increase.

Analysis of the report showed that the total transactions executed between the current 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 per cent from N70.31 billion (about $229.42 million) to N71.34 billion (about $232.79 million) between January and February 2020. Furthermore, the value of domestic transactions executed by Institutional investors outperformed retail investors by 24 per cent, while 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.

Reacting to the development, the Chief Executive Officer, Nigerian Economic Summit Group (NESG), Laoye Jaiyeola, said currency risk is preying on investors’ minds in the current volatile environment which had just started recording a decline with the spread of the virus.

Jaiyeola explained that the government needs to make structural reforms including getting rid of the costly fuel and power subsidies as these will help the government to create jobs and improve its ability to balance the books.