In a remarkable development, Nigeria has witnessed a significant surge in Foreign Portfolio Investment (FPI) flowing into its stock market. Nigeria’s FPI has experienced a staggering year-on-year growth of 167.8%, reaching N118.92 billion in February 2024 compared to N44.52 billion during the same period in 2023. This impressive increase can be attributed to the improved liquidity in the foreign exchange (FX) market, which is a direct result of the reforms implemented by the Central Bank of Nigeria (CBN).
The Nigerian Exchange Limited (NGX) disclosed this remarkable growth in its Domestic and Foreign Portfolio Investment report for February 2024. The report also revealed that the share of FPI in the total equities transaction rose by 0.3 percentage points to 11.78% out of the N1.009 trillion total equities transaction during the period.
Furthermore, foreign investors have shown a remarkable increase in their stake, with a month-on-month growth of 23.9% from N53.11 billion in January 2024 to N65.81 billion in February 2024. Additionally, the contribution of foreign portfolio investors to the total equities transaction witnessed a substantial rise from 8.15% in January 2024 to 18.39% in February 2024.
Analyzing the Year-to-Date (YtD) figures, the Nigeria’s FPI inflow stands at N40.71 billion, representing 37.9% of the total foreign investors’ commitment. On the other hand, the outflow amounts to N78.21 billion, accounting for 62.1% of the foreign portfolio investment.
Oluwaseun Dosumu, the Head of Research at Parthian Securities, shared insights into this remarkable growth. Dosumu highlighted that the resurgence of foreign investors in the Nigerian market is closely tied to the policies and dynamics of the foreign exchange market in 2024. The previous year, 2023, witnessed a weakened state of exchange rate fundamentals within the Nigerian forex market, primarily due to a decline in foreign exchange supply.
Dosumu expressed optimism for the future, stating that with the anticipation of an enhancement in supply during the year, there is a potential for a modest upturn in foreign portfolio investment in the Nigerian Exchange. This positive outlook reflects the growing confidence of foreign investors in the Nigerian market and the potential for further growth and development.
The surge in foreign portfolio investment is a testament to the efforts made by the Central Bank of Nigeria and the positive impact of their reforms on the country’s economy. It signifies a renewed interest in Nigeria’s stock market and highlights the potential for increased economic growth and stability in the coming years.
