Market News

In the second quarter of 2024 (Q2 2024), foreign investment in Nigeria’s equities markets was about $150 million, marking a 204 percent improvement from the $49.4 million recorded in the first half of 2024.

It also marks a whopping 1660 percent year-on-year growth from the $8.5 million recorded in Q2 2023.

According to the Q2 2024 Capital Importation data released by the National Bureau of Statistics (NBS), Foreign Portfolio Investment (FPI) in Nigeria during the second quarter was $1.4 billion, down by 32 percent from the $2.08 billion recorded in Q1 2024. Year-on-year, FPI grew in Q2 2024 by about 1215 percent, from $107 million recorded in Q2 2023.

In the first half of 2024 (H1 2024), foreign portfolio investment in Nigeria hit $3.48 billion, representing a 360 percent year-on-year growth from the $756.1 million recorded in the corresponding half of 2023.

During the half year, foreign portfolio participation in Nigeria’s equities hit $199.3 million, However, this marks a 14 percent decline from the $230.8 million recorded in the first half of 2023. In Q1 2023, there was a foreign participation of $222 million in Nigeria’s equities, however, this fell to $8.5 million in the second quarter.

In H1 2024, the bulk of foreign portfolio participation in Nigeria has been in money market instruments, such as treasury bills, OMO bills, and commercial papers. Within the period, about 77 percent, or $2.68 billion of Nigeria’s foreign portfolio investment was in money-market instruments. For Q2, $1.08 billion was recorded, while Q1 recorded about $1.61 billion.

Year-on-year, foreign participation in Nigeria’s money market instruments during the half-year grew astoundingly almost 20 times from $139 million in H1 2023. The growth in foreign investment in money-market instruments is linked to some of the sky-high rates offered on some of those bills.

For example, in H1 2024, Nigeria’s Central Bank offered yields of up to 22.5 percent on some of its treasury bills. The apex bank also offered OMO bills at 22 percent, some of the highest rates offered on CBN-issued money market instruments. In the second half, the rates have become even larger, with the CBN offering OMO bills at 27.25 percent, all to attract foreign portfolio investment into those instruments.

In the debt securities market, even private companies are not left out of these huge returns. Companies with impressive credit ratings have been offering commercial papers at 25 percent, 28 percent, and even 30 percent discount rates.

Medium-term to long-term bonds have not been out of the FPIs, as $599 million worth of FPIs went to bonds in H1 2024. However, about $420.8 million of this figure occurred in the first quarter. Compared to H1 2023, there was a 55 percent growth, as $386 million worth of FPIs went to bonds in H1 2023.

In H1 2024, the total capital importation into Nigeria hit $5.98 billion, marking a 177 percent year-on-year growth from $2.16 million recorded in H1 2023. About 58 percent of the total capital importation has come from foreign portfolio investment.