Nigerian Equities Market Attracts $202million Foreign Investments in Three Months

The Nigerian equities market attracted $201.69 million in the first quarter, Q1, of 2016 amid the nation’s plunging foreign exchange earnings.

An analysis of the Q1 capital importation report showed that foreign portfolio investment emerged largest earner, ahead of the two other major components- Foreign Direct Investment (FDI) and Other Investments.

The foreign portfolio investment attracted $271.03 million in Q1, representing 38.12 per cent of total capital imported, out of which the equity sub-component accounted for $201.69 million, representing 74.41 per cent of total portfolio investment and 28.37 per cent of total capital imported.

The equity sub-component has remained the largest part of portfolio investment in every quarter since 2007.

Although it remained the largest sub-component in foreign exchange earnings, it however contributed the most to the decline in portfolio investment profile, as it recorded a quarterly decline of 74.5 per cent and a yearly decline of 82.3 per cent.

The second largest sub-component of portfolio investment was money market instruments, which accounted for $67.85 million, or 25.03 per cent, despite recording a quarterly decline of 57.62 per cent.

In contrast to the same quarter of 2015, bonds were relatively unimportant, accounting for only 0.55 per cent of portfolio investment in the period under review, representing a year-on-year decline of 99.79 per cent from $705.12 million to $1.5 million in the first quarter of 2016.

The second largest component was Other Investment, which accounted for $265.48 million, or 37.34 per cent of all capital imported.

Just like in the final quarter of 2015, only two sub-components recorded investment- loans, which accounted for $241.81 million or 91.09 per cent of other investment, and Other Claims, which accounted for $23.66 million or 8.91 per cent.

Each of these sub-components had recorded large quarterly declines of 42.54 per cent and 60.8 per cent respectively.

Comparatively, FDI recorded an increase in the first quarter of 2016, from $123.16 million to $174.46 million, increasing its share of total capital importation from 7.91 per cent to 24.54 per cent, but remained the smallest part of imported capital.

The first quarter of 2016 also saw a large change in the composition of capital imported, as the decline in portfolio investment of 71.55 per cent- the largest quarterly fall on record, left it with 38.12 per cent contribution to total capital imported, compared to 61.18 per cent in the previous quarter.