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Foreign investments in stock exchange hit N676bn

By on September 23, 2013

The total amount invested by foreign investors in the Nigerian securities between January and July 2013 stood at N676bn.

This amount comprises the inflows and outflows of Foreign Portfolio Investments for the period under review.

Investigations by our correspondent on Friday at the NSE showed that between January and March 2013, the foreign transactions totalled N217.57tn, representing 42.7 per cent of the N510.1bn worth of transactions recorded in the first three months of the year.

For April to June, a total of N365.07bn worth of foreign transactions was recorded, while for the month of July, the total amount of FPIs in the NSE was N93.71bn.

The amount for July is N56.53bn, which is 38 per cent lower than the N150.24bn recorded at the end of June, according to the latest figures provided by NSE on its website.

This is, however, a marked improvement over the FPI inflows and outflows recorded at the end of the first quarter, this year.

The report also put the total inflows of FPI within the period under consideration at N31.81bn, representing a decline of 65 per cent or N58.34bn in inflows compared to N90.15bn recorded at the end of the previous month.

The total outflow in the month under consideration was N61.90bn, representing a marginal rise of N1.81bn or three per cent compared to N60.09bn recorded in June 2013.

The FPI represents the passive holdings of securities and other financial assets, which may not entail active management or control of the securities’ issuer. It is usually positively influenced by high rates of return and reduction of risk through geographic diversification.

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

Speaking on the issue, the Chief Executive Officer of the NSE, Mr. Oscar Onyema, said foreign investors had continually been showing interest in the Nigerian market, owing to the various reforms carried out in the Exchange in the last few years.

He added that the reforms had impacted positively on the market, which he noted was an attractive factor to the foreign investors who were usually on the lookout for strong emerging markets to invest.

Onyema also explained that the NSE was glad to note that there had been increased participation by the local investors who had begun to return to the market after their huge exit following the global meltdown and the banking crisis in 2009.

He said, “Last year, the NSE recorded a local participation of 44 per cent, while foreign participation accounted for 56 per cent of activities in the same year. The rally we saw in the market in 2012 was on the back of foreign investments.

“It is also good that our local investors have started to return to the market and we are very hopeful that we will see more of this as the year runs out; we at the Exchange are bullish that the market would pick up further this year.

“It is important to state here that the Nigerian stock market has been cleaned up to give good returns to the foreign investors and our market is too big to be ignored by foreign investors who are looking to take advantage of the opportunities offered by the African markets and other emerging economies, and this is what has kept these investors.”

The Chief Executive Officer, Proshare Nigeria Limited, Mr. Olufemi Awoyemi, stated that some foreign investors had been attracted by the exchange rates in the financial market.

He, however, said that the capital market regulators had the duty of ensuring more local investments in the market.

He said, “We can say that the exchange rate regime makes it attractive for foreign investors to move some of their portfolio into Nigeria at this point. However, government and the regulators have to do more to strengthen the local participation in the market.