Foreign Stock Market Investment Surges by 168% to N118.92bn

In February 2024, foreign portfolio investment (FPI) in the Nigerian stock market increased significantly by 167.8 percent compared to the same period in 2023, reaching N118.92 billion from N44.52 billion. 

This surge was attributed to improved liquidity in the foreign exchange market, driven by reforms implemented by the Central Bank of Nigeria (CBN).

According to the Domestic and Foreign Portfolio Investment report by the Nigerian Exchange Limited (NGX), FPI's share in the total equities transaction rose to 11.78 percent, marking a 0.3 percentage point increase to N1.009 trillion during the period. Additionally, foreign investors' stake grew by 23.9 percent month-on-month to N65.81 billion from N53.11 billion in January 2024, and their contribution to the total equities transaction increased to 18.39 percent from 8.15 percent between January and February 2024.

Year-to-Date FPI inflow stood at N40.71 billion, representing 37.9 percent of the total foreign investors' commitment, while outflow reached N78.21 billion, accounting for 62.1 percent of the foreign portfolio investment.

Industry experts had previously highlighted that a stable foreign exchange market would lead to increased FPI inflow. David Adonri, Vice Chairman of Highcap Securities, expressed optimism that sustained remittance of trapped funds to foreign investors by the CBN would rebuild foreign investors' confidence and attract more FPI into the stock market.

He emphasized the importance of addressing the issue of trapped funds, stating that if the remittance process continues, it could encourage more FPI to flow into the market. Additionally, he noted that foreign investors are more likely to invest in locations where they can easily move their capital in and out.

Oluwaseun Dosumu, Head of Research, Parthian Securities, said: “The resurgence of foreign investors in the Nigerian market is contingent upon the policies and dynamics of the foreign exchange market in 2024. The preceding year, 2023, witnessed a weakened state of exchange rate fundamentals within the Nigerian forex market, primarily attributed to a decline in foreign exchange supply.