Foreign Portfolio Investors Return to Equity Market

The value of Foreign Portfolio participation in equity trading in the Nigerian Stock Exchange totalled N851 billion as at October, 2017, a whopping 60.8 per cent higher than N517.55 billion recorded for the full year ended December, 2016.
The difference which represents a growth of N333 billion is set to further increase once the figures for November and December are reported.

Year 2017 has seen an average FPI per month of N85 billion as against N43 billion recorded in 2016. August, March and June recorded the most impressive inflows at N208, N132 and N101 billions respectively, with the lowest been N22.4 billion in April.

In the second quarter of 2017, Nigeria’s economy returned to positive growth as real gross domestic product (GDP) increased by 0.55% compared to Q2 2016, after five consecutive quarters of negative growth. This recovery was driven by improvements in the oil sector (8.8% of GDP), which expanded for the first time in seven quarters.

This renewed confidence has resulted in a rebound in foreign investments with Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI) up 49% and 128% respectively in Q2’2017 as compared to the same period the preceding year.

Similarly, investor appetite for equities has increased with the Nigerian Stock Exchange All Share Index (NSEASI) at 24.4% higher between January and June 2017, recovering from a 6.2% contraction between January and December 2016.

Speaking on what lies ahead for the rest of 2017 and beyond, PricewaterhouseCoopers were quoted as saying, “In the short term, we expect inflation and hence yields, to start to drop as the FG reaches its debt ceiling. This in turn may lead to an increase in domestic corporate bond issuances.

“Consistent with global sentiments, we also believe cross-border investors will turn bearish on emerging market bonds, in line with rating agencies’ sentiments.

“In the medium and long term, we expect to see activity pick up in the equity capital markets as Nigeria continues to emerge from the recession and companies execute plans shelved in 2015 due to uncertainty.”

He also noted that the World Economic Forum (WEF) rankings recently placed Nigeria 127 out of 144 countries with the backwardness showing more in the infrastructural capabilities.

Source: Dailytrust