Foreign Portfolio Investments (FPIs) in the Nigerian stock market surged by 180.95% in the first ten months of 2024, reaching N344.30 billion compared to N122.55 billion during the same period in 2023. This increase has been attributed to the Central Bank of Nigeria’s (CBN) monetary policies, including interest rate hikes, making portfolio investments more lucrative. However, foreign outflows rose significantly, up 136.95% to N400.04 billion, with total foreign transactions jumping 155.5% year-on-year to N744.34 billion.
Domestic investors dominated the market, accounting for N3.727 trillion (83.35%) of total transactions year-to-date. Retail investors contributed N1.91 trillion, while domestic institutions accounted for N1.82 trillion. On a monthly basis, transactions rose marginally by 1.97% in October 2024 compared to September, and foreign inflows still lagged domestic transactions by 82%. Analysts highlighted that the improved foreign inflows reflect increased investor confidence due to fiscal reforms and the CBN’s measures to tackle inflation and stabilize the currency.
Investment experts noted the positive impact of FPIs on Nigeria’s foreign exchange market and reserves, driven by the demand-supply dynamics of the FX market. Analysts emphasized that higher FPIs signify growing foreign confidence in the Nigerian economy, supported by the CBN’s stance on inflation and a stabilizing naira. Despite concerns over high-interest rates, experts argue that these measures signal the CBN’s commitment to curbing inflation and ensuring currency stability, fostering optimism among local and international investors alike.