Foreign equity investors increased their stake in the nation’s capital market in February 2024 partly due to the affordability of Nigerian stocks as a result of naira devaluation and strategic positioning ahead of the dividend season which commences in April.
According to the data provided by the Nigerian Exchange Group (NGX), foreign investors injected N65.81 billion into the NGX accounting for 18.39 percent of the total equity investment in February. In January of this year, foreign equity traders invested N53.11 billion or 8.15 percent of the total amount invested in January. The amount invested in February by foreign equity traders represented a 23.9 percent increase over their transactions in January of this year.
Domestic investors continued their dominance on the Nigerian bourse as they invested N598.41 billion in January 2024, amounting to 91.85 percent of the total transactions, and N292.07 billion in February representing 81.61 percent of the total transactions.
The total amount invested in February by both foreign and domestic equity traders, which was N357.88 billion, represented a decline of 45.07 percent when compared to N651.52 billion invested in January 2024.
The reason for decline is not far-fetched. The Central Bank of Nigeria (CBN), while prioritising inflation moderation, hiked the Policy Monetary Rate (MPR), which is the nation’s benchmark interest rate to 22.75 percent in February up from 17.5 percent in December 2023.
The noticeable decline is partly due to the rate hike by the CBN as investors sought better yielding assets in the fixed income market, and partly due to seasonal variation in the sense that the total amount invested in February 2023 which was N188.91 billion was lower than N195.10 billion invested in January 2023. The same pattern was repeated between January and February 2022.
