The Nigerian Stock Exchange (NSE) data on domestic and foreign investor participation for December 2019 has revealed that foreign investor participation in the local bourse remained poor.
Specifically, foreign inflows declined 35% m/m to N21.69 billion (US$60.3 million) in December while outflows declined at a slower pace, down 22% m/m to N41.45 billion (US$115.1 million). Consequently, net outflows were little unchanged in December (N19.76 billion) compared to November (N19.58 billion).
Overall, in 2019, foreign inflows into the stock market fell 27% y/y to N419.13 billion (US$1.16 billion) while net outflows widened to N104.29 billion (US$289.7m) compared to N66.21 billion (US$183.9 million) in 2018, reflecting the fact that foreign investors remained net sellers for the second consecutive year.
The negative returns from the market for the past two years has been mainly due to reduced foreign participation affirming the fact that foreign investors remain the key drivers of the stock market. This year, however, our optimism on the market is based on expectation of local institutional participation.
Following CBN’s announcement barring non-banking corporates as well as individuals from accessing the OMO market, increased liquidity in the secondary debt market, as well as auctions, has since sent yields crashing. There has been a sharp decline in Nigerian Treasury Bills rate at the primary market auction over a three-month period from 12.94% before the announcement was made to 5.1% at the last auction.
That said, asides global risk, a major risk facing Nigerian capital markets in 2020 stem from recent policies of the CBN and their possible negative impact on banking sector profits. Oil price risk and in effect currency risk stand out as an extraneous factor that could deteriorate, hence, a sharp fall in the oil price would have negative implications.
You may be interested
Aisha Buhari’s actions have redefined First Lady office – OsinbajoWebby - April 8, 2021
AishaVice President Yemi Osinbajo Thursday extolled the virtues of wife of the President Mrs Aisha Muhammadu Buhari, saying she has…
Bandits do not deserve to live — El-RufaiWebby - April 8, 2021
The Kaduna State Governor, Nasir El-Rufai, has again called for the total annihilation of bandits and other non-state actors perpetrating…
Imo Monarch And His Cabinet Members Kidnapped After Attending Traditional WeddingWebby - April 8, 2021
Unknown gunmen have kidnapped the traditional ruler of Umueze Nguru in the Aboh Mbaise Local Government Area of Imo state,…