Nigeria suffered a net deficit of N26.6 billion in foreign portfolio transactions in the first quarter of this year amidst fears of political and macroeconomic uncertainties.
A report on foreign portfolio investments (FPIs) obtained over the weekend indicated that the country recorded a negative balance of N26.6 billion in inflow and outflow transactions by foreign portfolio investors in Q1 as against a positive balance of N30.88 billion recorded same period last year.
The report also showed that foreign portfolio transactions dropped by N159.95 billion in Q1, representing a decrease of 41.89 per cent from the turnover in Q1 of last year. Total foreign portfolio transactions dropped from N381.82 billion in first quarter 2018 to N221.87 billion in first quarter 2019.
Foreign outflows surpassed inflows in 2019 with the sellers accounting for N124.24 billion as against N97.63 billion by the buyers. In Q1 last year, foreign inflows had outpaced outflows with N206.35 billion and N175.47 billion respectively.
The FPI report, coordinated by the Nigerian Stock Exchange (NSE), aggregates transactions from major custodians and capital market operators and it is widely regarded as a credible measure of the FPI trend. The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.
Foreign portfolio outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE. Segmental analysis delineates the proportion of foreign to local participation, institutional to retail investors as well as the momentum of activities among others.