Total turnover of activities by foreign portfolio investors (FPIs) in Nigeria has tripled to its highest in five years as investors continue to show positive disposition to Nigerian investments.
Total FPIs transactions rose by 194 per cent in the first eight months of this year.
This translates to N655.47 billion from N222.78 billion recorded in the comparable period of last year. This year’s performance is the highest in five years.
Latest report on FPIs yesterday showed that total inflows so far this year were 34.5 per cent more than the entire total turnover of inflows and outflows recorded in corresponding period of last year. This underlines the significant increase in investors’ appetite for Nigerian investments.
Foreign transactions, which were less than one-tenth of total activities at the stock market in the first eight months of last year, were about one-fifth of total transactions so far this year. This further shows the increasingly positive foreign investors’ attitudes.
The proportion of foreign investors’ participation in the Nigerian market slumped to its lowest level in recent years as Nigeria struggled with foreign exchange (forex) crisis, low productivity, insecurity and social crisis.
The FPI report, coordinated by the Nigerian Exchange (NGX), included transactions from nearly all custodians and capital market operators and it is widely regarded as a credible measure of foreign portfolio trend.
The report uses two key indicators-inflow and outflow, to gauge foreign investors’ mood and participation in the equities market and the economy. While inflows and outflows indicate direction of portfolio transactions, total FPI measures the momentum and level of participation.
The eight-month report showed that total inflows so far in 2024 stood at N299.73 billion, 214.64 per cent above similar total inflows of N95.26 billion last year and 34.5 per cent above total inflows and outflows of N222.78 billion recorded in the first eight months of last year.
Total outflows meanwhile increased by 178.97 per cent to N355.74 billion in 2024 from N127.52 billion recorded in comparable period of last year.
The proportion of foreign participation, which was at a single digit of 9.22 per cent by August last year, has risen to 18.86 per cent last month, driven by the three-digit improvements on the buy and sell sides.
Total FPIs in the first eight months of previous years had stood at N301.37 billion, N262.85 billion, N470.2 billion and N594.46 billion in 2022, 2021, 2020 and 2019 respectively. The previous highest was in 2018 when the market recorded N906.86 billion FPIs deals.
The growing foreign participation has contributed to rising momentum of activities at the Nigerian market. Total turnover at the Nigerian Exchange (NGX) in the past eight months of this year stood at N3.48 trillion, about 44 per cent above N2.42 trillion recorded in the comparable period of last year.
Market analysts attributed the improvement in foreign participation in the Nigerian market to the gains of macroeconomic reforms.
Global stock data tracked by The Nation’sMarket Intelligence at the weekend indicated that Nigerian stock market is the second best-performing market globally with average year-to-date return of 31.68 per cent.
The data included the most prominent stock markets and cut across the various tiers of advanced, emerging and frontier markets. These included United States, United Kingdom, Germany, Japan, France, Hong Kong, Russia, India, Brazil, China, Thailand, Turkiye, Saudi Arabia, Qatar and United Arab Emirates (UAE). African markets included Nigeria, South Africa, Kenya, Morocco, Ghana, Egypt and Mauritius.
A recent report by the Central Bank of Nigeria (CBN), Business Expectations Survey (BES), had shown that business owners are more optimistic about the prospects of the Nigerian economy, with notable improvements in investors’ confidence in the key sectors of agriculture and manufacturing.
Managing Director, AIICO Capital, Dr. Femi Ademola, said increase in foreign inflows and participation implies that foreign portfolio managers are now more optimistic about the country’s economic prospects and are increasingly looking for opportunities to invest in Nigeria.
He said such stance could send a more reassuring signal to the markets and help to moderate the country’s foreign exchange (forex) position.
The growing confidence in the economy underlines general expectations that Nigeria’s first domestic foreign-currency denominated bond may record oversubscription amidst strong demand from retail and institutional investors. (The Nation)
