By Peter Egwuatu

Foreign Portfolio Investments, FPIs, inflows through the Nigerian stock market grew by 180.95%  in the first ten months of this year (January-October) to N344.30 billion from N122.55 billion in the corresponding period of 2023.

Investment analysts have attributed the development to the monetary policy regime of the Central Bank of Nigeria, CBN, which has skyrocketed interest earnings on portfolio investments since this year.

However, Vanguard’s findings from the data released by the Nigerian Exchange Limited, NGX, showed that the foreign investment outflow also increased by 136.95% to N400.04 billion from N168.83 billion in 2023.

The total foreign transactions Year-to-Date, YtD, stood at N744.34 billion indicating a jump by 155.5% from N291.38 billion in the same period of 2023.

The data further revealed that domestic investors recorded N3.727 trillion transactions turnover accounting for 83.35% of the total N4.470 trillion value of transactions recorded by the Nigerian Exchange, NGX, YtD.

The retail investors recorded N1.91 trillion while domestic institutional investors accounts for N1.82 trillion.

Meanwhile, on a monthly basis, total transactions at the nation’s bourse increased marginally by 1.97% from N493.01 billion (about $307.84 million) in September 2024 to N502.73 billion (about $300.05 million) in October 2024. The performance of the current month when compared to October 2023 (N220.94 billion) revealed that total transactions significantly increased by 127.54%.

In October 2024, the total value of transactions executed by Domestic Investors outperformed transactions executed by Foreign Investors by 82%.

Commenting on the inflows by the foreign investors, Victor Chiazor, analysts at Fidelity Securities Limited, said: “The jump in the overall foreign investment inflows reflects improved investor confidence driven by the government’s fiscal and monetary reforms. The CBN’s tough stance on inflation with constant hike in monetary rate resonated well with foreign investors”.

Commenting on the impact of the increased FPI on the exchange rate, David Adonri, Vice Chairman, Highcap Securities, said: “When FPIs flow into the stock market, it impacts the foreign exchange market positively as the rate in the FX market is determined by demand and supply dynamic.

“This, in turn, also boosts foreign reserves. Increase in FPI is also indicative of rising foreign investors’ confidence in the market and the economy at large.”

Reacting as well, Ambrose Omordion, Chief Operating Officer, at    InvestData Consulting, said: “The improved outlook of foreign investors was inspired by both CBN’s stance on inflation and the stabilizing Naira.

“Although higher interest rates tend to be negative for stocks, in theory, I believe the CBN’s continuous interest rate hike is an indication of its tough stance on inflation and the need for currency stability, by extension”.