Foreign Investments in Nigeria’s Stocks Surge by 204% in Q2 2024
Overview of Foreign Investment Growth
Foreign investments in Nigeria’s stock market surged significantly in the second quarter of 2024, reaching $150 million. This marks a 204% increase compared to the $49.4 million recorded in the first quarter of the year. The National Bureau of Statistics (NBS) released Q2 2024 capital importation data showing an astounding 1,660% year-on-year growth, from $8.5 million in Q2 2023.
Foreign Portfolio Investment in Q2 2024
Despite the remarkable performance in stock investments, Foreign Portfolio Investment (FPI) in Nigeria dropped by 32% to $1.4 billion in Q2, down from $2.08 billion in Q1 2024. However, this still represents a 1,208% year-on-year increase compared to Q2 2023, when FPI stood at only $107 million.
H1 2024 Investment Figures
In the first half of 2024, foreign portfolio investments in Nigeria hit $3.48 billion, showing a 360% year-on-year increase compared to $756.1 million in H1 2023. Despite this overall growth, participation in equities dropped by 14%, with $199.3 million recorded, down from $230.8 million in H1 2023. Notably, equity investments in Q1 2024 were at $222 million, which fell dramatically to $8.5 million by Q2.
Money Market Instruments Dominate Investments
The majority of foreign portfolio investments in Nigeria during H1 2024 were in money market instruments such as treasury bills, OMO bills, and commercial papers. Approximately 77% of the total portfolio investments, or $2.68 billion, went into these instruments. Investments in money markets reached $1.08 billion in Q2, slightly down from $1.61 billion in Q1. This marks an explosive 20-fold increase from the $139 million recorded in H1 2023.
Reasons Behind the Surge
The sharp rise in investments is attributed to the high-yield environment created by the Central Bank of Nigeria (CBN). In H1 2024, the CBN offered attractive yields on treasury bills, up to 22.5%, and OMO bills, up to 22%. In H2, these rates were even higher, with OMO bills offering up to 27.25%, further attracting foreign investments.
Investment in Bonds and Private Debt
Foreign investments in bonds during H1 2024 amounted to $599 million, with $420.8 million of this occurring in Q1. This figure represents a 55% growth compared to the $386 million invested in bonds during H1 2023. Private companies with strong credit ratings also attracted significant foreign investments by offering commercial papers at high discount rates of up to 30%.
Total Capital Importation in H1 2024
In total, Nigeria saw $5.98 billion in capital importation during H1 2024, a 177% increase compared to $2.16 billion in H1 2023. Foreign portfolio investments contributed to 58% of this capital inflow. The high interest rates offered in Nigeria and policies implemented by the CBN to boost foreign capital inflows are seen as major drivers behind this surge.
Expert Opinions on the Surge
Banking analyst Matilda Adefalujo from Meristem Nigeria links the increase in investments to recapitalization efforts, noting the active primary market activities in various banking stocks. Investment research analyst Samuel Oyekanmi of Norrenberger attributes the rise to CBN’s foreign exchange policies, which have made it easier for foreign portfolio investors to bring money into Nigeria. Oyekanmi also points to the high-interest rate environment as a factor making Nigeria an attractive destination for high-yield investments.
Social Media Reactions:
- “This surge in foreign investment is exactly what Nigeria needs right now.” – @LagosInvestor
- “Nigeria’s market is on fire! 204% increase? That’s impressive.” – @FinanceGuru254
- “Looks like Nigeria is finally getting some love from foreign investors.” – @EconomyWatcher
- “CBN’s policies seem to be paying off. Those high-yield rates are a huge attraction.” – @CBN_Analyst
- “Foreign investments up 204% in Q2! Nigeria might just become the next big thing.” – @GlobalTrade
- “Amazing growth in portfolio investments. Let’s hope this continues.” – @MarketMonitor
- “Foreign investors are flocking to Nigeria for those high yields!” – @AfricaMarketWatch
- “204% growth in stock investment? Nigeria’s really stepping up its game!” – @StockTalks
- “With these figures, Nigeria’s future is looking bright.” – @InvestorProspect
- “Those high returns on treasury bills are impossible to ignore.” – @FinanceBuff
- “Investing in Nigeria’s stocks seems like a smart move right now.” – @CapitalChatter
- “Good to see Nigeria back in the game with foreign investments.” – @GlobalInvestment
- “This investment boom could change everything for Nigeria.” – @FintechWhiz
- “Nigeria is becoming a hotbed for foreign investments, thanks to CBN.” – @CentralBankerTalk
- “Foreign investors are clearly seeing the potential in Nigeria’s market.” – @EmergingMarketsInsider.
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