Foreigners invested N1tn in NSE last year — Report

The total amount of foreign portfolio investment in the Nigerian Stock Exchange last year stood at N1.042tn.

The amount, which indicates the total inflow and outflow of FPI from January to December 2013, is N234bn or 29 per cent higher than the N808.40bn recorded at the end of 2012.

Investigations by our correspondent at the NSE on Friday showed the total inflow of FPI within the period under consideration was N531.26bn, representing an increase of 19 per cent or N79.86bn, compared to the N451.40bn recorded at the end of 2012.

The total outflow between January and December 2013 was N510.78bn, representing a rise of N153.78bn or 43 per cent, compared to the N357bn recorded in the preceding year.

Foreign portfolio investments represent the passive holding of securities and other financial assets, which may not entail active management or control of the issuer. They are usually positively influenced by high rates of return and reduction of risk through geographic diversification.

The return on the FPI is normally in the form of interest payments or non-voting dividends.

Confirming the increasing level of the FPIs, the Chief Executive Officer, NSE, Mr. Oscar Onyema, said foreign investors had continually been showing interest in the Nigerian market due to the various reforms carried out at the exchange in the last few years.

He said the corresponding response from the portfolio had been encouraging, adding that the NSE was set to do more this year to ensure that the interest was sustained.

He said, “The operations of the exchange in 2014 would focus on sustaining the market growth which we recorded at the end of activities in 2013 and the NSE would also sustain the attraction of foreign investors in the Nigerian capital market.

“This year, the NSE would increase its investor education with other financial market regulators, to enhance financial literacy.”

He said that the NSE would ensure a world-class surveillance programme and enhance government relations for the capital market and national economic development.

Lending credence to this, the Director-General, Securities and Exchange Commission, Ms. Arunma Oteh, said about $5.4bn (N864bn) had so far been invested in the Nigerian bond market by foreign investors.

According to her, the huge investment in Nigerian bond by foreign investors is a demonstration of the confidence they have in the nation’s economy.

She said, “In April 2013, our domestic bond market got a huge boost, following the inclusion of Nigeria’s sovereign bonds in Barclay’s Emerging Market Bond Index. This was in addition to its admission into the JP Morgan local currency bond index in October 2012.

“This has put our local currency bond market within the radar of foreign investors who year-to-date, have invested an estimated $5.4bn in Nigerian bonds. In September 2012, prior to the admission of FGN Bonds to any international bond index, foreign investors’ holding of Nigerian bonds was approximately $1.2bn.

“Even Nigeria’s Treasury Bills, which have been popular among international investors, were equally positively impacted by this development with international investor holdings increasing from $3.9bn to $6.2bn.”