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Business News of Monday, 27 December 2021


FPIs to remain on sidelines as outflows hit N210bn in 11 months

Nigerian Exchange Limited (NGX) Nigerian Exchange Limited (NGX)

The total amount of foreign outflows on the Nigerian Exchange Limited (NGX) have now risen by N209.76 billion between January to November 2021 and this is expected to keep foreign portfolio investments (FPIs) on the sidelines in 2022.

The FPI outflow includes sales transactions or liquidation of portfolio investments through the stock market whilst the FPI inflow includes purchase transactions on NGX (equities only).

According to the November Domestic & Foreign Portfolio Investment report of the NGX, foreign inflows stood at N189.42 billion in 11 months while outflows stood at N20.76 billion. Also, domestic inflow grew to N65 billion in November 2021, foreign inflow stood at N33.12 billion whereas domestic outflow rose by N61.58 billion while foreign outflow stood at N36.44 billion.

However, the report revealed that the total transaction value at the domestic equities market declined by 7.9 per cent month-on-month (m/m) to N196.14 billion in November as against October’s figure of N213.07 billion. The performance of the current month when compared to the performance in November 2020 (N317.81 billion) revealed that total transactions decreased by 38.28 per cent.

Further analysis of the report revealed that in November 2021, the total value of transactions executed by domestic Investors outperformed transactions executed by foreign investors by 30 per cent while total foreign transactions increased by 63.98 per cent from N42.42 billion to N69.56 billion between October 2021 and November 2021.

Over a 14 year period, domestic transactions decreased by 59.54 per cent from N3.556 trillion in 2007 to N1.439 trillion in 2020 whilst foreign transactions increased by 18.45 per cent from N616 billion to N729 billion over the same period. However, the transaction data for 2021 shows that total foreign transactions are circa N399.18 billion, whilst total domestic transactions are circa N1.342 trillion.

Reacting to the performance of the market over 11 months, analysts at Cordros Capital in an emailed note, said, “In the short term, while the declaration of 2021 FY dividends may support market performance in H1 2022, we believe buying activities will be constrained by expectations regarding monetary policy direction and developments in the political landscape.