The foreign appitite for Nigerian stock market investment semed to have waned in February going by information released by the Nigerian Stock Exchange. Although the total transactions at the nation’s bourse increased by 39.44% from N84.10 billion recorded in January 2016 to N117.27 billion (about $0.60 billion) in February 2016, when compared to the same period in 2015, total transactions decreased by 36.44% from the N184.49 recorded in February 2015
A more concerning trend is that domestic investors outperformed foreign investors by 27.04%. While domestic transactions increased from 48.43% in January 2016 to 63.52% in February 2016 foreign investors’ transactions decreased from 51.57% to 36.48% over the same period. On the other hand, Foreign outflows increased by 20.79% from N26.36 billion in January 2016 to N31.84 billion while foreign inflows decreased by 35.68% from N17.01 billion in January 2016 to N10.94 billion in February 2016.
One would have expected that the weakening of the Naira would encourage Foreign Investment Participation but from the numbers as noted above, it appears that the reverse has been the case. The reason could be due to the translation losses that the weak Naira would generate when the investments are re converted to other “hard currencies”. It could as well be to lack of economic policy direction of the present administration in Nigeria. See details