Foreign investors withdraws N455bn stock over FX crisis, inflation

Foreign investors withdrew N455.62bn from the Nigerian stock market in 2024, significantly outpacing total inflows and reinforcing concerns about investor confidence despite the Central Bank of Nigeria’s efforts to stabilise the naira.

Industry experts attributed this to the volatility of the naira, stressing that it created uncertainties and that inflation also caused a blurry future for foreign investors.

Data from the Nigerian Exchange Limited’s Domestic and Foreign Portfolio Investment Report showed that while foreign transactions for the year amounted to N852.03bn, outflows accounted for 53.47 per cent, as inflows stood at N396.41bn, further highlighting the exit of foreign investors from the Nigerian capital market.

The report revealed that foreign participation in the Nigerian stock market remained relatively low, accounting for 15.25 per cent of total transactions, while domestic investors dominated with N4.73tn, representing 84.75 per cent.

The imbalance in participation between domestic and foreign investors reflects a broader trend observed in recent years, with foreign players reducing their exposure to Nigerian equities amid economic uncertainties and capital control concerns.

Foreign outflows varied significantly throughout 2024, reflecting shifts in investor sentiment. In January, foreign investors withdrew N37.33bn, while inflows stood at N15.78bn, leading to a net outflow of N21.55bn.

The trend continued in February, with outflows rising to N40.88bn, and inflows increasing to N24.93bn, narrowing the net outflow to N15.95bn. In March, inflows surged to N52.66bn, outpacing outflows of N41.60bn, making it the first month in 2024 where foreign investment in the stock market exceeded exits.
By April, foreign investors accelerated their withdrawals, with outflows jumping to N78.25bn, while inflows stood at N42.58bn, leading to a net outflow of N35.67bn, the largest recorded in 2024.

In May, the outflows remained high at N69.41bn, while inflows increased to N54.87bn, resulting in a net outflow of N14.54bn.

In June, outflows declined to N43.94bn, while inflows fell to N38.25bn, leaving a net outflow of N5.69bn.

The second half of the year saw lower outflows in some months but did not result in sustained foreign confidence in the market. In July, foreign outflows dropped to N19.95bn, the lowest recorded in the year, while inflows also declined to N37.57bn, leading to a net inflow of N17.62bn.

In August, outflows increased slightly to N24.38bn, while inflows dropped to N33.09bn, resulting in another net inflow of N8.71bn. However, the trend reversed in September as outflows climbed back to N30.15bn, while inflows sharply declined to N11.26bn, leading to a net outflow of N18.89bn.

Foreign exits slowed in October, with outflows declining to N14.15bn, while inflows stood at N33.31bn, creating a net inflow of N19.16bn. The trend of net inflows continued in November, with foreign withdrawals rising slightly to N15.09bn, while inflows dropped to N25.85bn, resulting in a net inflow of N10.76bn.

However, December saw a return to high outflows, as foreign investors pulled out N40.49bn, while inflows were N26.26bn, leading to a net outflow of N14.23bn. Overall, total foreign outflows for 2024 reached N455.62bn, exceeding inflows of N396.41bn by N59.21bn.

source: punchng.com

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