Uncertainty, sustained foreign exchange shortage, insecurity and other macro economic challenges, continues to dampen foreign investors patronage in Nigeria’s bourse as participation dropped to 11 per cent.

Portfolio Investment Report of NGX for the month of May showed that local investors have continued to jostle for stocks with improved earnings and high dividend payment ahead of the interim dividend and 2024 full-year result.

Foreign participation has so far moderated in recent years due to issues around forex liquidity and monetary policy, placing their total transactions at 11 per cent in 2023.

Also, the transaction data for 2024 showed that total domestic transactions hits N1.791 trillion, whilst total foreign transactions stood at N458.29 billion.

The positive domestic investor sentiment, according to analysts has been driven mostly driven mostly by earnings and dividend payouts announced by companies in the wake of earnings season.

However, some analysts have advised conscious trading as rising interest rate continues to trigger uptick in fixed income market but maintained their positive outlook on dividend yield and capital appreciation in bluechip stocks.

Further breakdown of the report showed that total transactions at the nation’s bourse increased by 2.64 per cent as at 31 May 2024, from N346.23 billion (about $260.28 million) in April 2024 to N355.38 billion (about $239.56 million) in May 2024.

The performance of the current month (June 2024), when compared to the performance in May 2023 (N322.92 billion) revealed that total transactions increased by 10.05 per cent.

Also in May 2024, the total value of transactions executed by domestic investors outperformed transactions executed by foreign investors by circa 30 per cent.

Further analysis of the total transactions executed between the current and prior month (April 2024) revealed that total domestic transactions increased by 2.53 per cent from N225.40 billion in April 2024 to N231.10 billion in May 2024.

Similarly, total foreign transactions increased by 2.86 per cent from N120.83 billion (about $90.83 million) to N124.28 billion (about $83.78 million) between April 2024 and May 2024.

In addition, institutional investors outperformed retail investors by two per cent. A comparison of domestic transactions in the current month and prior month (April 2024) revealed that retail transactions increased by 12.66 per cent from N100.77 billion in April 2024 to N113.53 billion in May 2024.

However, the institutional composition of the domestic market decreased by 5.66 per cent from N124.63 billion in April 2024 to N117.57 billion in May 2024.

Over a 16 year period, domestic transactions decreased by 10.94 per cent from N3.556 trillion in 2007 to N3.167 trillion in 2023; whilst foreign transactions also decreased by 33.28 per cent from N616 billion to N411 billion over the same period.

Investment Banker & Stockbroker, Tajudeen Olayinka said that is one of the reasons equity market remain resilient in spite of high interest rate regime or high yield environment in the fixed income space.

According to him, the local institutional investors are more active these days, and are able to cover up for any potential shortfall from foreign portfolio investors. He pointed out that the local investors are really energising the market because of the presence of highly sophisticated institutional investors.

However, he added that the market still need foreign portfolio investors to come around with much needed foreign currencies to support the foreign exchange market.

President of Ibadanzone Shareholders Association, Eric Akinduro said the nation’s economy is not yet attractive for foreign investors.

“One of the major factors that grows an economy is influx of foreign investment but when this is absence in an economy, it will definetly affect the development of such economy.”

President of NewDimension Shareholders Association, Patric Ajudua said foreign investors can only invest in a country where return on their investment and repatriatriation of proceeds are guaranteed.

“Rather, what we are witnessing now is foreign investors leaving the country. It is very unfortunate,” he said.