There are indications that foreign investors’ participation in the Nigerian stock market has declined as foreign outflow surpassed the inflow by 12.2% Year to Date, November 2024.

Vanguard’s analysis from the latest data released by the Nigerian Exchange Limited, NGX showed that foreign investors investment outflow YtD November 2024 stood at N415.13 billion, higher than the inflow, which stood at N370.15 billion.

The data also indicate Month on Month, MoM, foreign portfolio inflow into the Nigerian stock market declined significantly by 22.4 % to N25.85 billion in November 2024 from N33.31 billion in October 2024, caused by high yields from the debt securities.

According to the domestic and foreign portfolio report of the NGX, the foreign outflow MoM increased by 6.6% to N15.09 billion in November from N14.15 billion in October 2024.

The report further showed that total transactions (Domestic and Foreign ) in the local bourse declined by 12.0% MoM to N442.34 billion in November 2024 from N502.73 billion in October 2024.

Market analysts have attributed the decline to the shift in the demand for debt securities driven by attractive high yields.

In November 2024, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 82%.

A further analysis of the total transactions executed between the current and prior month (October 2024) revealed that total domestic transactions decreased by 11.83% from 455.27 billion in October 2024 to N401.40 billion in November 2024. Similarly, total foreign transactions (Foreign inflow & outflow) decreased by 13.74% from 47.46 billion to N40.94 billion about N4.61 million between October and November 2024.

The report also showed that institutional investors outperformed retail investors by 2%. A comparison of domestic transactions in the current month and prior month (October 2024) revealed that retail transactions increased by 14.90% from N170.04 billion in October 2024 to N195.38 billion in November 2024. However, the institutional composition of the domestic market decreased by 27.77% from 285.23 billion in October 2024 to 206.02 billion in November 2024.

Reacting to the performance of the portfolio investment, analysts at Cordros Research stated: “We highlight that the lower participation in the local bourse may be primarily attributed to investors’ preference for debt securities due to attractive yields in the fixed-income market. Specifically, domestic inflows (90.7% of gross transactions) dipped by 11.8% MoM to 401.40 billion in November from N455.27 billion in October due to a decline in collections from institutional investors (-27.8% MoM) amid increases from retail investors (+14.9% MoM). On the other hand, foreign inflows (9.3% of gross transactions) dropped after a month of expansion, declining by 13.7% m/m to N40.94 billion in November from N47.46 billion in October. While we expect domestic investors to continue to contribute the most to total transaction value, we think buying activities, generally, will be constrained by

elevated yields in the fixed income market. Additionally, we think the ongoing geopolitical tensions are likely to constrain FPI participation in the Nigerian stock exchange market”.