November 2023 saw the Nigerian Exchange (NGX) witness a substantial surge in foreign involvement, reaching a noteworthy N71.37 billion ($75.76 million), constituting 23.74% of the total monthly transactions—the highest foreign portfolio participation recorded in the NGX for the year.
Data sourced from NGX and tracked by Nairametrics revealed that the overall transactions for November 2023 amounted to about N300.67 billion, with domestic participation contributing N229.30 billion.
Breaking down the figures, foreign inflow for November 2023 stood at N34.77 billion ($36.91 million), while foreign outflow amounted to N36.60 billion ($38.85 million). Conversely, domestic inflow totalled N113.53 billion, and domestic outflow mirrored closely at N113.77 billion. Domestic institutional investors played a significant role, contributing around N136.52 billion, while domestic retail investors added N92.78 billion to the mix.
Analyzing month-on-month trends, the total transactions in the NGX experienced a robust 34.08% increase in November 2023, reaching N300.67 billion from the N220.94 billion recorded in October 2023. Foreign transactions exhibited remarkable growth as well, boasting a 113.94% month-on-month increase to N71.37 billion in November 2023, up from N33.36 billion in October 2023, where foreign transactions represented 15.1% of the total.
The cumulative transactions in the NGX as of November 2023 amounted to N3.234 trillion, showcasing a substantial 39.16% surge compared to the total transactions recorded throughout 2022.
Delving into historical data, foreign transactions in the NGX reached their pinnacle in 2014 at N1.539 trillion, surpassing the N1.137 trillion domestic transactions recorded in the same year. However, a downturn began in 2019, with foreign participation dwindling to N943 billion from the previous year’s N1.219 trillion. In 2022, foreign participation in the NGX hit its lowest point since 2007, totaling N379 billion. The available data indicates that the foreign participation figure for 2023 is poised to be in line with the 2022 figure.
Regarding the exchange rate, the consequences of the renewed foreign participation in the NGX on the exchange rate remain uncertain. Despite experts linking the decline in foreign portfolios in Nigeria’s capital market to the supply of foreign exchange (FX), discernible changes in the exchange rate are yet to materialize, even as the Naira continues its descent into the N1000/$ territory.
