Foreign portfolio investments drop to N65bn in 3 months

By Chinwendu Obienyi

Foreign Portfolio in Nigeria’s securrities market fell to N65.08 billion in the second quarter (Q2) of 2022, its lowest level in recent times, representing $12 million in dollar terms.

According to the Domestic and Foreign Portfolio Investment (FPI) reports for April, May and June 2022 respectively, foreign inflows are the value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net of repatriation of capital and repayment of loans.

The month of April 2022 saw foreign inflows standing  at N15.02 billion, while outflows stood at N12.06 billion. For the month of May and June 2022, foreign inflows stood at N25.53 billion and N24.53 billion.

Meanwhile, foreign outflows recorded in May and June 2022 stood at N19.77 billion and N17.56 billion respectively. According to Q2 2022 capital importation data by the National Bureau of Statistics (NBS), total capital importation into the country rose to $1.53 billion, up from $875 million in the same period last year.

Nigeria has experienced a fall in capital importation since 2020 following the unwinding of the apex bank’s open market operations policy that offered higher interest rates in exchange for foreign investors’ dollars.

Capital inflows also worsened following the global COVID-19 lockdowns that triggered major capital outflows out of emerging markets. But while other sectors have improved albeit gradually, foreign portfolio investments into equity have worsened as investors kept off Nigeria’s stock market.

In Q1 2022, foreign inflows dropped to $31.8 million from $206 million in the whole of 2021.

Commenting on the development, analysts at Nairametrics recalled that total FPI inflows into the country since 2020 stood at over $1 billion compared to $1.9 billion recorded in the Q3 2017 alone.

“Foreign investor apathy for Nigerian equities confirms transactions on the country’s stock exchange are largely domestic. In the past, foreign investors have driven investment inflows into the country with their money directly correlated with the rise or fall in the All-Share Index (ASI). However, stocks have performed relatively well in the last three years and domestic investors have dominated transactions in stocks at the Exchange.