Foreign Portfolio Investments In Nigerian Stock Market Surge By 180.9%

Foreign Portfolio Investments (FPIs) into the Nigerian stock market saw a remarkable surge of 180.95% between January and October 2024, reaching N344.30 billion compared to N122.55 billion in the same period in 2023.

Key Drivers of the FPI Growth

Investment analysts attribute this significant growth to the Central Bank of Nigeria’s (CBN) monetary policies, which have increased interest earnings on portfolio investments. The CBN’s consistent hikes in the monetary policy rate have improved investor confidence, especially among foreign participants.

However, data from the Nigerian Exchange Limited (NGX) also revealed that foreign outflows rose by 136.95%, from N168.83 billion in 2023 to N400.04 billion in 2024.

Overview of Transactions Year-to-Date (YtD)

The total foreign transactions for 2024, Year-to-Date, amounted to N744.34 billion, a 155.5% increase from N291.38 billion in 2023. Meanwhile, domestic investors maintained a strong presence, contributing N3.727 trillion, accounting for 83.35% of the N4.470 trillion total transactions recorded by the NGX.

Retail Investors: N1.91 trillion
Domestic Institutional Investors: N1.82 trillion

Monthly Performance

On a month-by-month basis, total transactions rose marginally by 1.97% from N493.01 billion in September 2024 to N502.73 billion in October 2024. Compared to October 2023, where transactions stood at N220.94 billion, this represents a massive growth of 127.54%.

Notably, in October 2024, domestic investors outperformed foreign investors, accounting for 82% of the total transaction value.

Expert Insights

Victor Chiazor, an analyst at Fidelity Securities Limited, commented that the surge in FPI inflows reflects improved investor confidence driven by Nigeria’s fiscal and monetary reforms. He noted, “The CBN’s consistent stance on inflation and its monetary tightening measures have resonated positively with foreign investors.”

David Adonri, Vice Chairman at Highcap Securities, added, “The inflow of FPIs positively impacts the foreign exchange market, as the demand-supply dynamics influence FX rates. This also bolsters foreign reserves, signaling greater confidence in Nigeria’s economy.”

Ambrose Omordion, COO of InvestData Consulting, remarked that the improved outlook among foreign investors was driven by the stabilizing Naira and the CBN’s anti-inflation measures. He stated, “While higher interest rates typically weigh on stocks, the CBN’s tough stance on inflation and its focus on currency stability have created an attractive environment for foreign investors.”