Revealed: Why foreign investors are pulling out of NGX

• Foreign investors are steadily pulling out their investments due to naira’s crash against the US dollar
• The Nigerian Exchange Limited (NGX) data shows that foreign inflows plummeted to N11.26 billion in September.
• Foreign inflows into Nigeria in the first three quarters of 2024 stood at N310.99 billion, more than N108.93 billion recorded 

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Foreign inflows into the Nigerian Exchange Limited (NGX) dropped to the lowest point in September at N11.26 billion.

The development is based on data on the domestic and foreign portfolio investment on the NGX.

Foreign investment in Nigerian Exchange crashes in September amid naira volatility Credit: Bloomberg / Contributor
Source: Getty Images

Foreign investors liquidate funds in NGX

The report shows that as foreign inflow plummeted, foreign investors increased the amount they liquidated between August and September 2024.

Foreign inflows into Nigeria in the first three quarters of 2024 stood at N310.99 billion, more than N108.93 billion recorded in the same period in 2023.

Punch reports that the highest inflow value was recorded in May this year at N54.87 billion and has dropped steadily since to N11.26 billion in September.

Foreign outflow worsened to N30.15 billion in September compared to N24.38 billion in August.

Investors blame the naira’s volatility

Investment experts have said that the naira’s volatility and high interest rates by the Central Bank of Nigeria (CBN) are why investors abandon the equity market in search of alternatives.

Data from the FMDQ Exchange shows that the naira depreciated to N1,652.25 per dollar on Friday, November 15, 2024.

The Monetary Policy Committee of the CBN pegged the country’s interest rate at 27.25%.

According to National Bureau of Statistics data, the apex bank tightened the interest rate to tackle inflation, which hit 33.88% in October.

Experts project further interest rate hikes following the rise in inflation.

Breakdown of NGX performance in 2024

Meanwhile, the NGX report indicated that as of September 2024, total transactions at the exchange rose by 29.90% from N379.52 billion in August to N493.01 billion in September.

The current month’s performance shows that total transactions rose by 66.67% compared to the same period in 2023.

In September 2024, the total value of transactions by domestic investors outperformed foreign investors by 84%.

In the review month, retail investors outperformed institutional investors by 28%. 

A comparison of domestic transactions in the current month before August shows that retail transactions rose by 59.42% from N180.72 billion in August 2024 to N288.10 billion in September 2024.

Nigerian oil companies with highest profits in 9 months

Legit.ng earlier reported that despite security issues, six oil firms in Nigeria posted a combined profit of N626.6 billion in their nine-month operations.

The firms include Seplat, TotalEnergies, Conoil, MRS, and Eterna Oil, which achieved N629.6 billion profit before tax in the first three quarters of this year.

The amount represents an 184% spike from the N133 billion recorded in the same period in 2023.

Source: Legit.ng