Nigeria experienced a remarkable surge in Foreign Portfolio Investment (FPI) into its stock market, recording a staggering 167.8% increase year-on-year, soaring from N44.52 billion in February 2023 to N118.92 billion in February 2024. This growth was largely fueled by improved liquidity in the foreign exchange (FX) market, driven by reforms implemented by the Central Bank of Nigeria (CBN).
The Nigerian Exchange Limited (NGX) revealed this significant rise in its Domestic and Foreign Portfolio Investment report for February 2024. FPI's share in total equities transactions also saw a 0.3 percentage point increase to 11.78%, contributing to the N1.009 trillion total equities transaction during the period.
Month-on-month, foreign investors' stake surged by 23.9% to N65.81 billion from N53.11 billion in January 2024. Moreover, their contribution to total equities transactions spiked to 18.39% from 8.15% between January and February 2024.
Year-to-date, FPI inflow stood at N40.71 billion, accounting for 37.9% of the total foreign investors' commitment, while outflow amounted to N78.21 billion, representing 62.1% of the foreign portfolio investment.
Oluwaseun Dosumu, Head of Research at Parthian Securities, commented on the resurgence of foreign investors in the Nigerian market, stating that it hinges on the policies and dynamics of the foreign exchange market in 2024. He noted that 2023 witnessed a weakened state of exchange rate fundamentals in the Nigerian forex market, primarily due to a decline in foreign exchange supply. However, with the expectation of an enhanced supply in 2024, there is potential for a modest upturn in foreign portfolio investment in the Nigerian Exchange.
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