Foreign Inflows to Nigeria's Stock Market Hit 15-year Low

Recent data has revealed that there has been a significant decline in foreign investors who are interested in Nigerian stocks, which has been in for six consecutive years. The data shows the considerable decline has continued despite the Nigerian stock market experiencing a massive rally.

The total amount of stocks foreign investors purchased dropped to N174.80 billion last year, the lowest since 2008. The year 2022 accounted for N195.76 billion. This data is according to the published data from the Nigerian Exchange Limited (NGX).

In 2008, foreign inflows recorded N153.46 billion due to the financial crisis that led to a crash in the country. Stocks worth N235.82 billion were offloaded by foreign investors last year, up from total sales amounting to N183.47 billion in 2022.

Foreign participation in the market declined to 11.48% from 16.32% in 2022, while domestic investors increased to 88.52% from 83.68% in 2022.

Foreign inflows into Nigerian stocks had jumped more than seven-fold in May last year to N27.51 billion, its highest level since December 2021, as the market soared on the previous two trading days of that month following the announcement of petrol subsidy removal by Tinubu on May 29, a report shows.

However, the increase in foreign participation was short-lived as foreign exchange scarcity lingered in the country.

The recent capital importation data from the National Bureau of Statistics show that portfolio investment in equities declined to $8.37 million in the third quarter of 2023 from $8.52 million in Q2 and $222.31 million in Q1.

The Central Bank of Nigeria (CBN) recently announced that it had successfully distributed $2 billion across key sectors, including aviation, manufacturing, and petroleum, to settle the backlog of its outstanding foreign exchange liabilities.

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