Sunday, August 31, 2025
22.7 C
Lagos

Equity Flashnote: Foreign Investors Still Calling the Shots

Saturday, April, 21, 2018 marked the one year anniversary of the CBN’s (Central Bank of Nigeria) launch of the Investors and Exporters’ (I&E) FX window.

Although the policy was pitched almost a year after the CBN originally reneged on the June 2016 announcement of a transition to a flexible foreign exchange framework, initial scepticism which greeted I&E fizzled within weeks post-introduction after FX transactions in the window cumulated to US$1.9bn by May-2017.

The singular act of a market reflective pricing of foreign exchange, coupled with the recovery in global oil prices as well as the stability in domestic production, following cessation of militancy attacks on oil installations, reset the stage for a broad based macroeconomic rebound.

Shortly afterwards, exacerbating inflationary pressures began to moderate – settling at 13.3% in March 2018, the economy slipped out of recession in Q2:2017 and grew 0.8% Y-o-Y in 2017, pressure on consumer spending power also tapered while recovery from external sector shock materialized amid improved export figures (most especially from crude oil).
Most remarkably, Foreign Portfolio Inflow (FPI) data has reflected the attraction of foreign investors into the Nigerian equities market with inflow into equities accounting for 29.7% and 49.6% of total capital and FPI flows respectively; resulting in a 42.3% equity market return in 2017 with NSE ASI as the 11th best performing index in the World and 2nd in Africa.

The equities market rally of 2017 post-FX market liberalisation saw investors taking advantage of cheap and attractive valuations which were previously jettisoned due to demand paucity from foreign investors. Particularly, tier-1 banking stocks as well as premium consumer goods and industrial goods stocks drove the positive sentiment.

In line with historical trend, domestic investors joined the bandwagon towards Q4:2017 especially after the gradual moderation in fixed income yields following the FGN’s decision to restructure debt portfolio and the CBN’s cessation of long dated OMO bill offerings.
Whilst FPI flow recovery post I&E introduction is nearing the pre-2014 shock levels of US$14.9bn with the 2017 inflow at US$7.3bn, attraction of Foreign Direct Investment (FDI) has been steadily slow, dwarfing the 2014 annual levels by 56.9%, notwithstanding structural reforms policy document rolled out by the fiscal Authority.

The Economic Recovery and Growth Plan (ERGP), despite having a launch date preceding the I&E, has achieved very little in generating patient real sector FDI flow with long lasting impact on employment and growth; thus begging the question; Where is our FDI?

But more essentially, recent lull in foreign equity investor sentiment, post-January 2018 Bull Run, suggests more dangerously, the dominance of foreign investors in shaping market sentiments and propelling positive equity market trends or otherwise.

What do equities hold for the rest of 2018 and are there still bright spots for the market in the build-up to the 2019 General Elections? Should Investors “Sell in May and Go Away“ or are there still cherry-picks plausible for potential upsides?

spot_img
spot_img

Hot this week

Inspenonline Unveils Think-tank on NIIRA, Insurance Sector Recapitalisation

As the insurance sector witnesses a new dawn with...

SanlamAllianz, Cornerstone, emPLE, Enterprise Life, Leadway, Lasaco Throw Weight Behind IMT 4.0

The fourth edition of Insurance Meets Tech (IMT 4.0)...

NCDMB, Coppercrux Engage South-South Youths on CNG Technologies, Opportunities in Value Chains

The Nigerian Content Development and Monitoring Board (NCDMB), in...

Fidelity Bank Champions Africa’s Export Growth at FNITCC Atlanta 2025

Leading financial institution, Fidelity Bank Plc has announced plans...

NAICOM, CAC Partner for 12- Month Recapitalisation Timeline

The Management of the National Insurance Commission (NAICOM) paid...

Topics

UBA Donates N500m to Lagos State Security Trust Fund

L-R: Group Deputy Managing Director, United Bank for Africa...

World Telecom & Information Day Targets ICT Entrepreneurship

The World Telecommunication and Information Society celebrated the fact...

Senate to Empower AMCON for Better Operations

L-R: Executive Directors, Asset Management Corporation of Nigeria (AMCON),...

Accugas Signs MOU with Inoyo Toro Foundation to Establish Education, Internship Training Programme  

L-R: Okwudili Onyia, Communications Manager, Savannah Energy; Prof. Enobong...

World Bank, Others Commit $1.3bn to Tackle Illegal Wildlife Trade in Africa

The Global Wildlife Program has released the first-ever review of international...

Digital Encode Targets Unicorn Status, Showcases Cutting-edge Cybersecurity Solutions @ AfriTECH 4.0

Digital Encode Limited, a leading Cybersecurity and Governance, Risk...

$3.5 Tr Malnutrition: The Zero Hunger Challenge

Hunger and malnutrition are pervasive problems that affect millions...

Win it Like Buhari: 5 Start-up Lessons to Take Away from Nigerian Elections

March 28 was a historic date in Nigeria's history as it marked the first time the opposition defeated the ruling party in democratic elections in Africa's most populous country and biggest economy. Muhammadu Buhari, a former military leader who had ruled Nigeria for a 20-month period in the early 1980s, campaigned as a born-again democrat and saw the tide of public opinion turn in his favor. Here, CNN's African Start-Up examines Buhari's campaign strategy and reveals the key business lessons entrepreneurs can adapt for startup success.
spot_img

Related Articles

Popular Categories

spot_imgspot_img