NGX sees dip in foreign investment despite year-on-year growth

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The Nigerian Exchange (NGX) experienced a 9.73% decrease in foreign investment in January 2024 compared to December 2023, with the total figure reaching N15.78 billion (approximately $36.7 million). While this marks a decline, the NGX did see a 60.37% year-on-year increase in foreign investment.

This is according to the latest Domestic and Foreign Portfolio Investment Report of the NGX.

On a general basis, trading figures from market operators on their Domestic and Foreign Portfolio Investment flows showed that at the end of January, “Total transactions at the nation’s bourse increased by 89.45 per cent from N343.90bn (about $382.59m) in December 2023 to N651.52bn (about $479.99m) in January 2024.

“The performance of the current month when compared to the performance in January 2023 (N195.10bn) revealed that total transactions increased significantly by 233.94 per cent. In January 2024, the total value of transactions executed by domestic investors outperformed transactions executed by Foreign Investors by circa 84 per cent.”

Read Also: Report reveals NGX second-best performing market in three months

Key Points:

Foreign Investment Decline: Compared to December 2023’s N17.48 billion (approximately $40.6 million), foreign investment in the NGX dropped by 9.73% in January 2024.

Year-on-Year Growth: Despite the monthly decline, foreign investment in the NGX remains significantly higher compared to January 2023, reflecting a 60.37% growth.

Increased Overall Transactions: While foreign investment dipped, the total value of foreign transactions on the NGX actually rose by 10.95% in January compared to December, reaching N53.11 billion (approximately $39.13 million) from N47.87 billion (approximately $53.26 million).

Analysis:

The decrease in foreign investment in January 2024, despite an overall rise in transactions, presents a potential cause for concern. This could be attributed to various factors, such as:

• Uncertainty surrounding the upcoming elections

• Persistent dollar scarcity

• Global economic fluctuations

It is important to note that a single month’s data does not necessarily establish a long-term trend. Further observation and analysis are needed to understand if this dip is a temporary fluctuation or indicative of a broader shift in foreign investor sentiment towards the Nigerian market.