Despite Dollar Restrictions, Foreign Portfolio Investment Rises By 26% To N594bn

Between January and August this year, the investments made by portfolio investors in Nigeria’s capital market rose by 26 per cent to N594.5bn, analysis of figures by THE WHISTLER has revealed.

The investment inflow came into the country despite the Covid-19 crisis and huge capital flow reversals.

As of August last year, the Nigerian Stock Exchange recorded a total of N470.2bn from foreign portfolio in equity trading.

Prior to the Covid-19 induced lockdown which crumbled global stock, the country recorded N251.9bn foreign portfolio transactions in the first quarter of this year.

The first quarter performance represents 40.17 per cent of the N626.9bn combined transactions of both domestic and foreign participants.

Nigeria recorded its index case of the pandemic which subsequently led to three- month lockdown and shutdown of most sectors of the Nigerian economy.

The impact of the pandemic also led to fall in global stock as most oil dependent economies like Nigeria were highly impacted by fall in oil prices.

Consequently, the second-quarter contributions of foreign portfolio holders plunged by N107.1bn quarter on quarter to N144bn from the N251.9bn recorded in the first quarter.

With the reopening of the Nigerian economy along side other world economies, foreign portfolio participation remained low following the country’s foreign exchange liquidity crisis which led to inability of foreign investors to repartriat their funds.

Nigeria’s foreign exchange backlog amounted to about $2bn, but the Central Bank of Nigeria in order to manage the heightened demand for foreign exchange resumed sale of dollar to the various Bureau de Change across the country after it suspended sale on March 27 this year.

Between July and August this year, foreign portfolio participation in the local bourse fell to N73.57bn, with the worst performance recorded in July.