For every dollar brought into Nigeria this year, more than $2 has been taken out according to a report on foreign portfolio investment (FPI).
A year-to-date report on FPI obtained at the weekend, indicated that Nigeria suffered a net deficit of 108 per cent in the first two months of the year.
The FPI outflow worsened in February, as uncertainties persisted over Nigeria’s foreign exchange management.
The report, coordinated by the Nigerian Stock Exchange (NSE), showed that FP outflow outpaced inflow by 108 per cent. The two-month report showed that foreign outflow totalled N58.20 billion as against foreign inflow of N27.95 billion.
Total foreign transactions of N86.15 billion represented 42.8 per cent.
Domestic investors, however, appeared to be stepping in to fill the gap left by the foreign investors. They invested N115.22 billion, representing 57.22 per cent of the total transactions, during the period.
Monthly analysis showed that FP outflow totaled N31.84 billion as against inflow of N10.94 billion. In the same period last year, foreign outflow was N81.60 billion while inflow was N52.35 billion.
In January, FPI report showed that foreign inflow stood at N17.01 billion as against outflow of N26.36 billion, representing a deficit of N9.35 billion.
Total foreign transactions thus were N43.37 billion. Nigerian investors accounted for N40.73 billion or 48.43 per cent of the total turnover of N84.10 billion recorded during the period.
In the comparable period of January last year, foreign investors appeared less edgy and there were more appetite for Nigerian equities, though the tinge of deficit was also evident then. Foreign inflow was N48.03 billion in January 2015 as against outflow of N51.08 billion. Total foreign transactions stood at N99.11 billion or 52.24 per cent of total turnover of N189.72 billion during the period. Domestic investors accounted for N90.61 billion or 47.76 per cent of total transactions.
The FPI report further highlighted the downtrend that had marked foreign portfolio investments since 2014.
The FPI report uses two key indicators-inflows and outflow to gauge foreign investors’ mood and participation in the stock market as a barometer for the economy.
The NSE report is regarded as a credible gauge of FP’s investments in Nigeria as it coordinates data from nearly all active and major investment bankers, stockbrokers, custodians and other capital market operators.
Foreign portfolio investment outflow includes sales transactions or liquidation of equity portfolio investments through the stock market while inflow includes purchase transactions on the NSE.
The 12-month foreign portfolio investment report for 2014 shown that foreign portfolio outflow was N846.53 billion as against inflow of N692.39 billion in 2014, representing a net deficit of N154.14 billion.
In 2013, total foreign inflow was N531.26 trillion compared with outflow of N510.78 trillion, leaving a positive balance of N20.48 billion.
In earlier preview for the investment market in the year, the NSE had noted that uncertainty and volatility dominate forecast for the New Year and beyond as Nigeria struggles with commodity price shocks and the resultant impact on the Naira.
“The downturn from 2015 has already continued into the New Year. Accordingly, we anticipate 2016 to be a challenging year for the capital market and the domestic economy,” NSE stated.
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