Earlier, the Nigerian Stock Exchange (NSE) published its monthly domestic and foreign portfolio investment report for Sept-19. According to the report, total transactions at the exchange increased by c. 8.6% y/y and 16.0% m/m to N141.5bn ($461.5mn). Also, the total value of transactions executed by foreign investors (66.8%) outperformed those of domestic investors (33.2%) and this was as total domestic transactions decline 19.9% m/m to N47.0bn while foreign transactions increased by 47.8%m/m to N94.5bn.
Notably, while net foreign inflows remained positive at N1.0bn (Total Inflow: N47.7bn; Total
Outflow: N46.7bn), the net domestic inflow was negative at N2.7bn (Total Inflow: N22.1bn; Total Outflow: N24.9bn). Further analysis of the component of the net domestic data showed that retail investors injected c. N0.1bn into the market. Meanwhile, institutional investors pulled-out N2.8bn – meaning the outflows from the domestic institutional investors dragged the overall performance of the exchange in Sept-19.
In our view, the continued outflow by domestic institutional investors was spurred by their
preference for the more attractive fixed-income investments amid a lack of positive catalysts in the macro space. However, we believe the renewed interest by foreign investors might, if sustained, deter institutional clients from the continued sell
down.
United Capital Research
