Breaking News: A significant 204% rise in foreign investments in Nigeria’s stock market was recorded in Q2 2024, according to a report by the National Bureau of Statistics (NBS). The report shows that foreign investments reached $150 million in the second quarter, up from $49.9 million in Q1 2024. This represents an astonishing 1,660% increase year-on-year from Q2 2023.
The NBS report titled ‘Capital Importation Data’ highlights that while investments in the stock market surged, Foreign Portfolio Investment (FPI), which includes all foreign investments, fell to $1.4 billion in Q2 2024, marking a 32% drop from the $2.08 billion recorded in Q1 2024. However, this still represents a significant 1,208% year-on-year growth compared to Q2 2023.
H1 2024 Performance Overview
The First Half (H1) of 2024 saw a remarkable inflow of $3.48 billion in FPI, reflecting a 361% year-on-year growth from the $755 million recorded in H1 2023. However, foreign investments in Nigeria’s stock market during H1 2024 stood at $199.5 million, showing a slight 14% decrease from the $208 million recorded in H1 2023.
Money market instruments like treasury bills, dollar bonds, and commercial papers attracted the majority (77%) of the FPI, receiving $2.68 billion in H1 2024, a dramatic 20-fold increase from $139 million in H1 2023. Analysts attribute this surge to high dividend rates offered by the Central Bank of Nigeria (CBN), which reached as high as 22.5% on some treasury bills in H1 2024.
CBN Policies and Market Outlook
In H2 2024, the CBN has further increased dividend rates, offering 27.5% on treasury bills to attract more foreign investment. Banking analyst Matilda Adefalujo links the stock market’s growth to recapitalization activities, noting increased primary market activities around banking stocks. Meanwhile, investment analyst Samuel Oyekanmi credits CBN policies and improved foreign exchange supply for boosting investor confidence in Nigeria’s market, especially in money market instruments.
Final Thoughts: The growing foreign interest in Nigeria’s financial markets, particularly money market instruments, signals positive investor sentiment amid high dividend yields. However, the drop in stock market investments may call for a strategic focus on stabilizing foreign portfolio investments in the sector.
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