Foreign Portfolio Investment Rises by 338.7% as Investors Raise Stake to N37.16 Billion in May

Nigeria’s stock market has witnessed a surge 338.72% in May 2023 as Foreign Portfolio Investments, FPI rises to N37.16 billion.

This is coming following the myriads of challenges relating to foreign exchange and the difficulty in repatriating their funds.

According to report, it is believed that they were betting on a positive economic direction from a new administration of President Bola Tinubu inaugurated at the end of the month.

Recall, Business Remarks reported last week that President Bola Tinubu says Nigeria is now ready for global business as ongoing reforms will be sustained for a more competitive economy that attracts Foreign Direct Investment (FDI).

He said this while speaking in separate meetings on the sidelines of the New Global Financial Pact Summit in France’s Palais Brongniart.

The Domestic and Foreign Portfolio Investment Report released by the NGX showed that foreign transactions fell by 53.16 per cent from N19.62 billion (about $42.51million) to N9.19 billion (about $19.94 million) between February 2023 and March 2023, while domestic transactions slipped by 19.06 per cent from N169.29 billion to N137.03 billion in the same period.

Vanguard also reported that Foreign Portfolio Investments, FPI, in the market was almost going extinct as the investors held just about four percent of the market as at the end of April, 2023.

The investment also dipped by 7.83 percent to N8.47 billion in April from N9.19 billion in March 2023, indicating a greater intensity of their pull back. The FPIs had maintained steady decline over the past seven years.

But in May foreign investors raised their stake to  N37.16 billion from N8.47 billion in April, representing a 338.72 percent increase, according to the  Nigerian Exchange Limited (NGX) report on Domestic and Foreign Portfolio Investors’ Participation in Equity for May.

The new FPI position represents an 11.5 percent of the total equity transaction during the month and a 7.07 percentage point increase compared to their total transaction (4.43%) in April.

Upon his inauguration on May 29, 2023, President Tinubu signaled an economic direction with a highpoint in removal of fuel subsidy and subsequent announced a foreign exchange market reform which caused a wave of excitement across the private sector as well as the domestic and foreign investors.

Oscar Onyema, Group CEO, NGX Group, had expressed optimism over the possible impact of the policy changes on foreign portfolio investment inflow into the market.

Speaking in reaction to the policy changes, Onyema had said: “There is bound to be more investment flows in Nigeria. All these are the right noises for money. Money goes to the least resistant places where it can get the best risk adjustment returns without unnecessary hassles because there is competition across the globe.

“On what we have seen in the last eight years, there has been an outflow of foreign portfolio investments predominantly and more than half of our markets are outside of America, but with these policy changes, you can begin to understand why we are very optimistic that these flows will come back and with it, attract additional flows.”

Meanwhile, further analysis of transactions during the month showed that total transactions rose to N322.92 billion in May as against N191.21 billion in the previous month, thus representing a 68.88 per cent increase.

Also, total domestic transactions increased by 56.37 per cent to N285.76 billion  from N182.74 billion in April.

The report also revealed that  domestic retail transactions increased by 19.29 per cent to N88.50 billion during the review period from N74.19 billion in April.

Similarly, the institutional composition of the domestic market increased significantly by 81.72 per cent to N197.26 billion in May 2023from N108.55 billion in April 2023.

 

 

 

Foreign Portfolio Investment (FPI)