Foreign investment in the Nigerian stock market in the second quarter of 2024 (Q2 2024) was approximately $150 million, marking an improvement of 204 per cent from the $49.4 million recorded in the first half of 2024.
It also recorded an impressive 1660% year-over-year growth from $8.5 million recorded in Q2 2023.
According to capital import data for the second quarter of 2024 released by the National Bureau of Statistics (NBS), foreign portfolio investment (FPI) in Nigeria in the second quarter was $1.4 billion, compared to $2.08 billion in the first quarter of 2024. down 32% from the dollar. On a year-on-year basis, FPI in Q2 2024 increased by approximately 1215% from $107 million recorded in Q2 2023.
In the first half of 2024 (H1 2024), portfolio investments in Nigeria from abroad reached $3.48 billion, representing a 360 per cent year-on-year increase from $756.1 million recorded in the corresponding half of 2023. Ta.
Over the past six months, foreign portfolio participation in Nigerian equities reached $199.3 million. However, this is a 14 percent decrease from the $230.8 million recorded in the first half of 2023. In the first quarter of 2023, foreign participation in Nigerian equities was $222 million. However, that decreased to $8.5 million in the second quarter.
In the first half of 2024, the majority of foreign portfolio participation in Nigeria was in money market instruments such as Treasury Bills, OMO Bills and Commercial Paper. During the period, about 77 per cent of Nigeria’s foreign portfolio investments, or $2.68 billion, were in money market instruments. The second quarter recorded $1.08 billion, while the first quarter recorded about $1.61 billion.
Foreign participation in Nigeria’s money market products has grown by a staggering 20 times compared to the same period last year, from $139 million in the first half of 2023. Increased foreign investment in money market instruments is associated with some extremely high interest rates. It will be provided as part of those bills.
For example, in the first half of 2024, the Central Bank of Nigeria offered yields of up to 22.5% on some Treasury Bills. The apex bank also offered OMO bills at 22%, which is some of the highest interest rates offered on short-term financial instruments issued by the CBN. In the second half of the year, interest rates were even higher, with the CBN offering OMO securities at 27.25 percent, all to attract foreign portfolio investments in these products.
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In the bond market, private companies are not excluded from these huge profits. Companies with good credit ratings offer commercial paper at discount rates of 25 percent, 28 percent, and even 30 percent.
Medium- and long-term bonds are out of FPIs as $599 million worth of FPIs were moved into bonds in H1 2024. However, approximately $420.8 million of this occurred in the first quarter. FPIs worth $386 million were invested in bonds in H1 2023, resulting in a growth of 55% compared to H1 2023.
Total capital imports into Nigeria in the first half of 2024 amounted to $5.98 billion, registering a 177 percent year-on-year increase from $2.16 million in the first half of 2023. Approximately 58 percent of total capital imports come from overseas portfolio investments.
