According to data released by the Nigerian Exchange (NGX), foreign involvement in the Nigerian equity market fell to 8.15% in January 2024, down from 13.92% and 12.76% in the comparable month of 2023.
In the Nigerian stock market, transactions totaling N651.52 billion were registered in January 2024, compared to N343.9 billion in the same month the previous year according to The Times.
Foreign portfolio investments made up N53.11 billion of the N651.52 billion during the study period, while domestic transactions totaled N598.41 billion.
Following the aftermath of the COVID-19 outbreak, foreign investments in Nigeria drastically decreased and have remained low ever since, primarily due to FX instability.
One barrier preventing foreign investors from entering the Nigerian market has been their inability to quickly repatriate their profits when they become due.
The naira has depreciated by 21% and 41% YTD at the official and parallel markets, respectively, against the US dollar due to strong demand for greenbacks and poor foreign inflows.
In an effort to inspire confidence and draw in new foreign investment, the governor of the CBN, Yemi Cardoso, met with foreign portfolio investors this week to brief them on some of the measures implemented by the top bank to preserve price stability and liberalize the FX market.
In his answers to queries from the different stakeholders, he outlined some of the CBN’s significant initiatives, such as clearing more than $2 billion in FX backlogs.
With the exception of five commercial banks, the CBN governor said that “The bank has cleared its foreign exchange backlog; the remaining banks would be cleared in the upcoming days. ”
Remember that the Governor had said earlier in February that the actual backlogs of foreign exchange due to all economic sectors had decreased to $2.2 billion, of which about $2.4 billion were invalid.
Lead, Portfolio Management, Norrenberger Asset Management, Victor Onyema, said that “The CBN’s recent initiatives to improve investor relations and reestablish market trust are encouraging. In particular, Foreign Portfolio Investors are anticipated to become more interested in Nigerian investments as a result of this proactive strategy.”
