Nigeria’s stock market has seen a remarkable surge in foreign investor activity, with equity trading by foreign investors skyrocketing 437% in the first four months of 2024.
This growth has pushed the total value of foreign equity trades to N334.01 billion, a significant increase from N62.18 billion during the same period in 2023.
Data from the Nigeria Exchange Limited (NGX) reveals that between January and April 2024, Nigerian stock investors exchanged equities valued at N1.894 trillion, a sharp rise from N721.44 billion recorded in the corresponding period of the previous year.
Foreign investors accounted for 17.63% of this total, while domestic investors dominated the market with 82.37%, trading N1.560 trillion worth of equities.
The increased foreign participation peaked in April 2024, with foreign investors trading N120.83 billion worth of stocks, representing 34.90% of the total value traded that month.
This surge highlights a growing confidence in Nigeria’s equity market despite broader economic challenges and a competitive fixed income market.
Analysts attribute this spike in foreign equity trading to various factors, including attractive stock valuations and improved regulatory frameworks.
“We expect continued interest in fundamentally sound stocks,” noted analysts at Comercio Partners, highlighting the positive market return of 33.64% by mid-June 2024.
Despite the attractiveness of fixed-income yields, particularly with Treasury bill rates reaching as high as 23.3% for one-year T-bills, participants remain drawn to equities, seeking growth in undervalued stocks.
Meristem research analysts predict a mixed performance in the equities market, driven by positive momentum and cautious trading.
The influx of foreign capital comes as a positive sign for Nigeria’s economic outlook, reflecting investor confidence in the nation’s regulatory and market reforms.
The NGX has been proactive in boosting market accessibility, recently launching a USSD platform to provide real-time stock market information, a move aimed at enhancing financial inclusion and market participation.
Prominent stockbroking firms have also played a crucial role in this trading boom.
CardinalStone Securities Limited led the market by trading stocks worth N197.535 billion, followed by Stanbic IBTC Stockbrokers Limited and United Capital Securities Limited.