Foreign direct investment in the Nigerian Exchange Limited (NGX) experienced a significant decline in September, reaching its lowest point for the year at N11.26 billion. This information is revealed in the most recent Domestic & Foreign Portfolio Investment Report issued by the NGX.
The report indicates a notable decrease in foreign capital inflow, coupled with a rise in the liquidation of investments by foreign investors during the period between August and September.
In the first nine months of 2024, foreign inflow into Nigeria amounted to N310.99 billion, a significant rise from N108.93 billion in 2023. The peak inflow occurred in May 2024, with N54.87 billion, but has since experienced a steady decline to N11.26 billion by September.
Conversely, foreign outflow worsened, reaching N30.15 billion in September, up from N24.38 billion in August. Analysts have pointed out that the volatile naira and elevated interest rates are prompting investors to leave the equity market in search of more attractive returns.
The naira was trading at 1652.25/$ on the Nigerian Autonomous Foreign Exchange Market on Friday, while the Central Bank of Nigeria's Monetary Policy Committee has set the benchmark interest rate at 27.25 percent.
The CBN continues to raise interest rates in an effort to combat inflation, which surged to 33.88 percent in October, leading to expectations of further rate hikes at the next MPC meeting, though not aggressively.
Additionally, the NGX report indicates that total transactions on the local exchange rose significantly by 29.90 percent, increasing from N379.52 billion (approximately $237.70 million) in August 2024 to N493.01 billion (around $307.84 million) in September 2024.
When compared to September 2023, where total transactions were N295.80 billion, this represents a 66.67 percent increase. In September 2024, transactions conducted by Domestic Investors surpassed those by Foreign Investors by approximately 84 percent.
An additional examination of the total transactions conducted between the current month and the previous month (August 2024) indicated that total domestic transactions rose by 40.23 percent, increasing from N322.05 billion in August 2024 to N451.60 billion in September 2024.
Conversely, total foreign transactions saw a decline of 27.95 percent, dropping from N57.47 billion (approximately $35.99 million) to N41.41 billion (around $25.86 million) during the same period, as noted in the report.
During the month in question, retail investors outpaced institutional investors by a significant margin of 28 percent. A comparative analysis of domestic transactions between the current month and the preceding month (August 2024) revealed a substantial increase in retail transactions, escalating by 59.42 percent. This surge represents a rise from N180.72 billion in August 2024 to N288.10 billion in September 2024.