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Foreign Investors Pull Out N1.77tr Over Insecurity - Politics - Nairaland

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Foreign Investors Pull Out N1.77tr Over Insecurity by dre11(m): 5:45am On Jun 10
By Helen Oji


Foreign investors pulled out N1.77 trillion from the nation’s stock market in the last two years, citing insecurity and economic uncertainties. Many blue-chip companies quoted on the stock exchange also experienced huge losses within the period.
Specifically, N435.31 billion in foreign portfolio investment outflow was recorded in 2017, while foreign investors withdrew N642.65 billion during the corresponding period in 2018.

In the same vein, foreign transactions accounted for about 51 per cent of the total transactions carried out in 2018, while domestic transactions constituted about 49 per cent during the same period.


Operators at the weekend expressed concern on the spillover effect and volatility caused by over-dependence on foreign investors in the nation’s stock market. They linked the huge investment outflow from foreign investors to uncertainties that shrouded the nation’s economic outlook, occasioned by insecurity, kidnapping and recurrent farmers-headers clashes.

According to them, this gives credence to the fact that while the large presence of foreign investors in the market signifies strong attraction to the country, their sudden reversal also portends great danger, given the bearish mode currently being witnessed in the market.

The operators insisted that the major reason for the depressed state of the market is the selldown by foreign investors who play a dominant role in the nation’s stock market.

After the January and mid-February 2018 rally, the market recorded unprecedented reversal in performance contrary to predictions by analysts. The capitalisation, which stood at N15,549 trillion as at Wednesday, February 28, 2018, dropped to N13,766 trillion Thursday, May 30, 2018, representing N1,783 trillion or 12.9 per cent loss.

Also, the All-Share Index declined by 12,076 points or 38.6 per cent to 31,254.19 from 43,330.54, achieved as at February 28, 2018.


The operators based their position on the claim that between 2007 and 2010 financial year, domestic transactions executed by retail investors outperformed foreign investors by close to 80 per cent as retail patronage dominated activities in various sectors in the equities market.

The dominance of foreign investors in the nation’s stock market could be traced from 2011, immediately after the global financial crisis that burnt the fingers of many domestic investors.

A breakdown of foreign, domestic investors’ participation in the stock market before the 2009 global financial crisis showed that domestic participation was worth N9,496 billion between 2007 and 2010, while foreign investors’ patronage constituted only N2,405 billion within the same period.

The operators linked the inability to sustain the upward trend in local participation to failure on the part of the government and regulators to attract retail investors (who incurred huge losses during the crises) back to the market and improve the general performance of the exchange.

The foreign investors are nervous about Nigeria’s macroeconomic and monetary outlook, especially the increasing political risks. Therefore they suggested that local institutions with strong capacity must invest in the market, to reduce the dependence on foreign investors and prevent unnecessary shocks. They also believe that creating policies that would attract retail investors back to the market would improve the general performance of the exchange.


In his reaction to the issue, the chief research officer of Investdata Consulting Limited, Ambrose Omodion, said the sooner government and regulators realise that increasing the participation of Nigerians in the market will reduce overdependence on foreign portfolio investors, the better for the nation’s equity market.

According to him, the trend could be reversed by effective economic policies that would drive infrastructural development, and productivity that would impact positively on the manufacturing sector to boost performance and support prices.

“It is the stability in the stock market that supports economic development and growth and also stimulates wealth creation. This stability comes in the form of policy and behavioural pattern of the market that help investors to plan their investment and predict the future.

“But any market that goes up and down as a result of inflow and outflow of foreign investment cannot be predicted, like what is happening in our market today. Domestic investors drove the bullish ascendency in 2007 and 2008. This was after the banking consolidation of 2006 had created awareness about the market and its wealth creation tendency,” Omodion said.

He called for the introduction of investment education that would increase investors’ knowledge of the financial market and drive more retail investors to the market. “Also, government must reduce their borrowing from the pension fund and allow good percentage of the fund to play the long-term investment role in the stock market to support economic development. Then, reduction in the cost of transaction and enhanced investors’ protection mechanisms must be established.”

The president, Ibadan Zone Shareholders Association, Eric Akinduro, said the main reason for the depressed state of the market is the selldown by foreign investors who play a dominant role in the nation’s stock market.


“Our market is overdependent on foreign investments and they will continue to dictate the tune of our market, since they have the larger investments. Really the market seems comfortable in terms of performance and returns but the political environment discourages domestic investors. Domestic investors do not have resources to push the market due to poor purchasing power. We are at the mercy of institutional investors. There is a problem here,” Akinduro stated.

The publicity secretary of the Independent Shareholders Association of Nigeria, Moses Igbrude, linked the persistent lull in the market to overdependence on foreign investors, noting that the local ones that were affected during the recession were being neglected.

According to him, “Depending on foreign investors to deepen our capital market is a very wrong concept and a lazy approach to growing an institution described as a barometer in measuring an economy.

“As the name implies, foreign investors are an unreliable set of investors. When the economy looks good, they will bring their money but when the reverse is the case, they will vanish into thin air with their portfolio of money, thereby creating more instability in the system.

“The government and other stakeholders should focus more on how to encourage and educate Nigerians on the importance and benefits of investing in the capital market. The focus should be on how to build local capacity that can absorb the effects of foreign portfolio investors.

On his part, an independent investor, Amaechi Egbo, said foreign investors are nervous about Nigeria’s macroeconomic and monetary outlook, especially the increasing political risks.

He regretted that virtually all stocks on the NSE have depreciated despite strong market fundamentals. He urged “strong institutions in the country to be at the forefront of this investment campaign by increasing their stakes in the equity market. Other local investors should equally see the trend as potential opportunity to take position in the Nigerian capital market.”


https://m.guardian.ng/news/foreign-investors-pull-out-n1-77tr-over-insecurity/
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by helinues: 5:48am On Jun 10
They are not real investors

Security is even better now compared to 4 years ago ?

Modified: To those quoting me: Is simple yes or No answers hard for Una?

Between the security now and 4 years ago, which one is better?

7 Likes 2 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by fukushaki(m): 6:02am On Jun 10
grin
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by biacan(f): 6:04am On Jun 10
Everyone is just pulling out......when will buhari pull out self

53 Likes 2 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by JasonScoolari: 6:04am On Jun 10
How will the economy look good when foreign investors are nervous about Nigeria’s macroeconomic and monetary outlook, especially the increasing political risks. No thanks to the gross incompetence of Baba Lifeless who's born to fail in all aspect.

How will our economy return back to it's rightful place where GEJ left it when Baba Lifeless is going about making unguarded speech about the citizens of his country?

Have you take a look at how President Paul Kagame is making Rwanda's economy attractive for foreign investors? Now that's a great leader if you ask.

But here in Nigeria, Baba Lifeless is closing everywhere like a mallam closing his kiosk for Friday prayers.

88 Likes 3 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by contigiency(m): 6:11am On Jun 10
They didn't pull out when boko haram was harassing the entire country up to the point of bumbing Abuja especially the United nations building and other areas.

They didn't pull out when Niger delta was boiling with militants bombing and exploding pipelines as if they were opening pure water bags.

And they didn't pull out when herdsmen issues were uncontrollable and many more. I simply don't believe this news headline.

I believe the investors pulled out for other reasons. They are free to go as many others will come in a matter of weeks.

8 Likes 4 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Jmk9292(m): 6:14am On Jun 10
How do we redeem the image of this country?
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Melison(m): 6:14am On Jun 10
Pulled out 1....trn??
Aye mi by the time buhari is done even that mumu wey dey sell suya go repent
Nansense

6 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by bamasite(m): 10:34am On Jun 10
What


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Modified:
Over a two year period. I was scared that it just happened once
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by chiedu7: 10:35am On Jun 10
This is what you get when you have an illiterate jihadist as ur Ruler.
Jmk9292:
How do we redeem the image of this country?
Remove the lifeless one.

15 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by tactius(m): 10:35am On Jun 10
helinues:
They are not real investors

Security is even better now compared to 4 years ago ?

It is still bad.

Boko down yes, but herdsmen, banditry, kidnapping.

And government insisting on price controls in the petrol and power sector is making things worse.

Mr APC man, tell Buhari that it is becoming like pdp times here.

13 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by hisexcellency34: 10:36am On Jun 10
Buhari has kee us finish!

15 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by tegafej(m): 10:37am On Jun 10
helinues:
They are not real investors

Security is even better now compared to 4 years ago ?

The way some persons reason and talk not just amazes me. It makes me wonder if they have brains at all to start with. So FIs are pulling out cos of insecurity which is an obvious problem and you are saying that are fake FIs. So the real ones are staying back or rather pumping their funds in a country with no economic clear cut plan ravaged by insecurities all over?

It's better to be foolish and quiet than being foolish and still be FTC

38 Likes 1 Share

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by tactius(m): 10:37am On Jun 10
chiedu7:

Remove the lifeless one.

And replace with PDP, who had similar issues back when they were in power?

PDP that had no answer for Boko other than to blame Buhari then in opposition for it?

Think outside the APC PDP box

1 Like 1 Share

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Ekez(m): 10:38am On Jun 10
Next level issa goal

2 Likes 2 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Sapphire94: 10:38am On Jun 10
helinues:
They are not real investors

Security is even better now compared to 4 years ago ?

Shut the fvck Up

25 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by TeraHawks: 10:39am On Jun 10
Your response reveals a shocking lack of understanding.
contigiency:
They didn't pull out when boko haram was harassing the entire country up to the point of bumbing Abuja especially the United nations building and other areas.

They didn't pull out when Niger delta was boiling with militants bombing and exploding pipelines as if they were opening pure water bags.

And they didn't pull out when herdsmen issues were uncontrollable and many more. I simply don't believe this news headline.

I believe the investors pulled out for other reasons. They are free to go as many others will come in a matter of weeks.

23 Likes 2 Shares

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Paperwhite(m): 10:39am On Jun 10
Yet a grossly irresponsible and incompetent president is still shining his sorry ass on seat while making silly excuses for failing to regig the nation's security apparatus.

10 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Xisnin(m): 10:39am On Jun 10
contigiency:
They didn't pull out when boko haram was harassing the entire country up to the point of bumbing Abuja especially the United nations building and other areas.

They didn't pull out when Niger delta was boiling with militants bombing and exploding pipelines as if they were opening pure water bags.

And they didn't pull out when herdsmen issues were uncontrollable and many more. I simply don't believe this news headline.

I believe the investors pulled out for other reasons. They are free to go as many others will come in a matter of weeks.

Many like Lebanese and Indian slavish investors?
You must be an economic illiterate.

27 Likes 1 Share

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by omoboriowo2019: 10:40am On Jun 10
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2 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by CanineOfJackal: 10:40am On Jun 10
helinues:
They are not real investors

Security is even better now compared to 4 years ago ?
30k BMC miscreants everywhere

23 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by bangbangall: 10:41am On Jun 10
Finally APC and Buhari next level is coming to reality.

5 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Pavarottii(m): 10:41am On Jun 10
Buhari
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by soke02(m): 10:41am On Jun 10
Jonathan is a saint compare to Buhari

11 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by bigfish3k: 10:44am On Jun 10
why wouldn't they, there is no economic blue print yet, no direction, nothing ; all we hear about is legislatitive leadership and accompanying juicy appointments
just like 2015... no ministers yet.
hope they wouldnt start blaming PDP again

......observers are watching..............

4 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Cornerkick: 10:44am On Jun 10
grin
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Paperwhite(m): 10:44am On Jun 10
helinues:
They are not real investorsSecurity is even better now compared to 4 years ago?

Dont add to the grief and sorrow of countless families including the 25 fellas that lost their lives in Sokoto ystdy.Do zombiesm with your dignity held high.

24 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by berrystunn(m): 10:45am On Jun 10
APC supporters how business??

7 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by chloride6: 10:46am On Jun 10
sad
Re: Foreign Investors Pull Out N1.77tr Over Insecurity by SarkinYarki: 10:46am On Jun 10
Let me make this clear !!!! God Almighty will certainly Punish those that voted and supported Buhari to the 3rd Generation!!!!! Let it be clear!!

10 Likes

Re: Foreign Investors Pull Out N1.77tr Over Insecurity by Blue3k(m): 10:46am On Jun 10

“As the name implies, foreign investors are an unreliable set of investors. When the economy looks good, they will bring their money but when the reverse is the case, they will vanish into thin air with their portfolio of money, thereby creating more instability in the system.

“The government and other stakeholders should focus more on how to encourage and educate Nigerians on the importance and benefits of investing in the capital market. The focus should be on how to build local capacity that can absorb the effects of foreign portfolio investors.

Lol this guy think domestic investors are stupid. Are they reading different charts or something. People invest to make returns on investment not to burn money. I'm of the opinion domestic investors have sane reservations about the overall economy.

The Nigerian stock market is in bear markets currently from what I seen recently.

4 Likes

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