By Chinenye Anuforo and Chinwendu Obienyi
Recent statistics from the nation’s stock exchange has shown that foreign investments in the month of May increased by 324.01 per cent from N22.45 billion in April to N95.19 billion.
The data also showed that, monthly foreign inflows outpaced outflows as foreign inflows increased by 403.09 per cent from N14.54 billion in April to N73.15 billion in May 2017. Foreign outflows also increased by 178.63 per cent from N7.91 billion in April to N22.04 billion in May2017.
In comparison to the same period in 2016, total foreign portfolio investment transactions from January to May 2017 increased by 74.03 per cent from N189.45 billion to N328.70, while the total domestic transactions increased by 38.40 per cent from N279.11 billion to N386.29 billion.
According to market analysts, main factors behind the rebound include increased confidence in policy initiatives by the government. The Group Chief Executive Officer, United Capital Plc, Mrs. Toyin Sanni explained that before now foreign investors were concerned about government’s policies around forex issues but confidence in policy initiatives in that regard recently has impacted foreign investments positively. She said, “Foreign investors were very concerned about availability of foreign exchange and the liquidity of the foreign exchange market. Now that those liquidity concerns have been addressed significantly, it has given them confidence to play more in our market and domestic investors have also been encouraged by the performance of our corporate entities’ that has been reported and that has also encouraged investment activities.
Continuing, Sanni said “Nigeria is also very much an oil revenue driven economy and of course with some of the security concerns in the Niger Delta having been addressed and production going up, we have for example the forcados prices that have been resolved and so production levels are going up. So there is increased confidence in the economy and I am aware that exports, even non-oil exports levels have also begun to inch- up so there is a more favourable view of medium to long term outlook for our market.”
She added that the fact that governments have also articulated the Economic Growth and Recovery Plan (EGRP) was also an advantage “Some of the new initiatives on ease of doing business are regarded as far reachable initiatives that if the government follows through with those initiatives, it will stimulate economic activity to attract more foreign direct and portfolio investment in our market. So, I think it is a vote of confidence in some of these initiatives. That is why we are seeing confidence in the equities market.”
The Chairman, Organising Committee of the Chartered Institute of Stockbrokers (CIS) National Workshop, Alhaji Umaru Kwairanga, argued that the recent initiatives taken by the Central Bank of Nigeria to solve the problem of chronic scarcity of forex, had boosted the economy and the capital market in particular, explaining that the All-Share Index had swung into positive territory after months of persistent declines and trading volumes had increased dramatically in the last couple of months.
The Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu also said the Central Bank of Nigeria (CBN) introduction of a forex window for investors, which is close to the primary market rate helped in boosting investment in capital market especially foreign investments.
Hear him, “The introduction of a forex window for investors gives foreign investors the assurance that if they bring in their funds and convert to naira, they can also convert at that window to foreign currency, and that brought a lot of investments, both foreign investment and local investments. The CBN governor during the announcement of the last MPC meeting mentioned that about N1 billion has been traded through that window and the CBN accounted for 30 per cent of that transaction.