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More Foreign Investors Leave As FPI Flows Crash By 228% - Investment - Nairaland

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Foreign Investors’ Interest In Nigeria Declines By 27.5% / Foreign Investors Dump 29 States In Q3 / 2019 Election: Foreign Investors Withdraw N435.41bn From Stock Market (2) (3) (4)

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More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 9:21am On Aug 31, 2020
Foreign Portfolio Investment, FPI, inflow to the Nigerian economy has recorded massive decline in the first seven months of 2020 (January-July) amidst growing negative macroeconomic numbers.

FPI mirrors the confidence level of foreign investors in the economy. The investments are made in the stocks of leading companies in the Nigerian Stock Exchange, NSE.

Financial Vanguard investigations reveal that total FPI inflow, so far this year, stood at N143.65 billion while ouflow is N287.57 billion, yielding a negative flow of N143.92 billion. The negative flow is 228 per cent higher than the N43.87 billion recorded in the corresponding period of 2019.

Development economists and financial experts told Financial Vanguard that the trend would lead to further pressure on the Naira exchange rate as the exiting foreign investors pull their cash from the nation’s foreign reserves.

Moreover, the withdrawal of the FPIs has put pressure on the nation’s stock market, forcing stock prices to crash with year-to-date losses to investors at -5.7 per cent as at last weekend.

Domestic Investments

However, amidst the negative sentiments from the foreign investors, their domestic counterparts appear to be taking advantage of the situation filling the gaps created by the retreating foreign investors, by buying up the stocks now at lower prices.

Consequently, total domestic portfolio investment rose to N675.55 billion as against total N670.45 billion in the corresponding period of 2019.

Experts comment

Reacting to the latest development in the FPI, the Executive Vice Chairman of Highcap Securities Limited, Mr David Adonri, said: “The prospects of Nigeria’s economy do not give confidence to foreign investors hence their exit.

‘‘The figures above reflects decline of foreign investors’ confidence. Nigeria lacks the capacity to surmount current economic challenges and investors have seen the government running helter-skelter to obtain foreign loans that will not facilitate economic recovery faster.

“With exit of foreign investors, hard currency inflow will plummet causing further decline of Naira. Foreign investors detest anything that will devalue local currency. Nigeria is entering a deadly period of stagflation which may persist till 2021.’’

Also commenting, Prof. Uche Uwaleke, a financial economist and Professor of Capital Market at the Nasarawa State University, said: “Expectedly, prior to COVID-19 there was a remarkable level of foreign investor participation in the stock market.

‘‘Since the pandemic entered the country late February followed by the collapse in crude oil price, country risk heightened in Nigeria leading to lower ratings by global Rating Services such as Moody and Fitch and the exit of many foreign investors.

‘‘As a matter of fact, the signs of foreign investors’ exit began to manifest in December 2019 when domestic investors outperformed their foreign counterparts, a trend that continued into the following year.

“To see clearly what has happened pre-COVID and now, one needs to use the NSE Domestic and FPI monthly reports as a guide. An interesting development to note in these reports is that transactions on the NSE were dominated by foreign investors prior to the pandemic in Nigeria. Except for the months of May, June and December 2019 that witnessed the dominance of domestic investors, foreign investors led transactions throughout 2019.

‘‘But all that has changed since 2020 with domestic investors outperforming foreign investors in relation to transactions executed.

‘‘The NSE reports reveal that institutional investors such as PFAs (Pension Funds Administrators) have been driving trades in the domestic space except for the months of April and May which saw retail investors taking the upper hand.

“Unlike during the 2008 financial crisis when the exit of foreign investors also resulted in significant dampening of sentiments of domestic investors leading to a near-crash of the stock market, this time around domestic investors have risen to fill the void created by their exit. ‘‘I think COVID-19 presents an opportunity to detach the stock market from the apron-string of foreign investors by leveraging the country’s huge population to deepen the participation of domestic investors.”

Regarding the return of foreign investors, he said: “ I think the spread, intensity and duration of the pandemic will determine when the capital market will witness an influx of FPIs.

‘‘Factors that will encourage their return include unification of exchange rates as well as reducing the spate of insecurity in the country.”

Reacting as well, Victor Chiazor, an analyst and head of Research and Investment at FSL Securities and Investment Limited, said: “The rise in foreign portfolio outflow year-to-date (July 2020) was largely as a result of the huge outflows recorded in January (N46.50 billion), February (N52.32billion) and March 2020 (N87.73 billion) as investors sold down to exit their investments on the back of fears around the country’s readiness to deal with the COVID-19 pandemic and the drop in global oil price.”

“The sell-off saw share prices of blue chip companies drop to historic lows as panic selling set in and caused a major dip in share prices.

‘‘Impressively, domestic portfolio investments was higher than foreign portfolio investments year-to-date and we believe this would impact the market positively as these funds will not put pressure on our local market when compared to foreign portfolio investments which are hot monies that could easily be withdrawn from the market and the economy at large once there are signs of economic headwinds.’’

Way forward

Suggesting solutions to the predicament, Uwaleke stated: “The massive rise in foreign outflow suggests the need to diversify sources of earnings for foreign exchange, as some of these investors will be looking at exiting their capital off the shores of the country and, depending on the level of demand for foreign exchange, it may adversely put pressure on the Naira given the level of the country’s foreign reserves.”

Reacting on ways to shore up foreign earnings, he said: “A possible increase in foreign inflow will be supported by the combination of significant improvement in company earnings, continuous rise in our foreign reserves and visible stability in the foreign exchange market, where the Naira is traded at a market determined rate.

“Going into Q3’20 (third quarter 2020), we expect foreign outflows to continue to outweigh inflows especially given the COVID -19 distortions, uncertainties around the value of the Naira and the level of our foreign reserves, but expect a bit of an improvement in the fourth quarter of 2020 as oil prices improve and impacts positively on the country’s FX reserves.”

In their comments, analysts at InvestData Limited said: “ The high foreign outflow was as a result of socioeconomic uncertainty associated with the COVID-19 pandemic, negative macroeconomic indices and mismatch in policies that had failed to give direction.’’

On the effect to the market, they said “The effect is on market liquidity which will slowdown economic recovery. As the market and the economy are moving in opposite direction, the prevailing low rates and yield have continued to push funds into stock market as way of hedging against inflation.

“The domestic investors increasing their stake in the market is good but the government and its economic managers should articulate policies that will support economic stability and the market. At the same time they should educate Nigerians on how to invest profitably in the market which will boost participation.

“The negative impact of the pandemic cannot be totally ruled out but Q3’20 performance would be better than Q2’20 as easing of lockdown continues across the globe.

‘‘With government and CBN intervention expected to start having positive effect on the system, on the whole, investors should have good entry and exit strategies at all time.”

https://www.vanguardngr.com/2020/08/more-foreign-investors-leave-as-fpi-flows-crash-by-228/amp/

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Re: More Foreign Investors Leave As FPI Flows Crash By 228% by GamalNasser: 9:22am On Aug 31, 2020
We warned y'all that the dull poorly lettered nepotic corrupt herdsman has nothing nothing to offer Nigeria but zombies no gree here ...Please can someone mention just one index Buhari has gotten right ..This can't be an error again because after 5 years there must be atleast something Buhari can show that he is doing right but there is absolutely none

108 Likes 7 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by ggirl4real: 9:25am On Aug 31, 2020
Nothing seems to be working in this country.

What's the way forward?

How are other countries moving forward?

Do they have saints as leaders?

10 Likes 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by SmartProf(m): 9:26am On Aug 31, 2020
I'm not surprised. You can't dish bones for wedding guests & expect them to stay put and lick their tongues...Even Lara who was brought in by Oshiomole as his Foreign Direct Investment in Edo State has also left.

83 Likes 3 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by GamalNasser: 9:27am On Aug 31, 2020
ggirl4real:
Nothing seems to be working in this country.

What's the way forward?

How are other countries moving forward?

Do they have saints as leaders?


Nigerians elected the worst possible leader ever imaginable and that's the problem ...I can assure you of MC Oluomo was president the results will be far far far better that what Buhari can ever Offer

41 Likes 2 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by Mynd44: 9:29am On Aug 31, 2020
ggirl4real:
Nothing seems to be working in this country.

What's the way forward?

How are other countries moving forward?

Do they have saints as leaders?

Mention 5 countries moving forward please

14 Likes 2 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by ggirl4real: 9:30am On Aug 31, 2020
GamalNasser:


Nigerians elected the worst possible leader ever imaginable and that's the problem ...I can assure you of MC Oluomo was president the results will be far far far better that what Buhari can ever Offer

How do we move forward? Do we have to keep repeating the same mistake every four years?

3 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by SLAP44: 9:34am On Aug 31, 2020
Mynd44:

Mention 5 countries moving forward please

Sinking deeper into pessimism.

51 Likes 4 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by greatdreamer(m): 9:39am On Aug 31, 2020
A
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by ggirl4real: 9:39am On Aug 31, 2020
Mynd44:

Mention 5 countries moving forward please

It depends on what you understand by my statement "moving forward".

The context I'm using it is in terms economic growth.

Even before this COVID-19 Pandemic, our economy has been crawling.

49 Likes 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by Nobody: 9:40am On Aug 31, 2020
The oil price has fallen, so no free money, so foreign investors move out.

Then there is price controls....

2 Likes 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 9:50am On Aug 31, 2020
God will feed us!
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by XXXXTENTACION: 9:55am On Aug 31, 2020
Buhari is working hard cheesy


He is gradually turning Nigeria to Dubai undecided

2 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 10:18am On Aug 31, 2020
Mynd44:
Mention 5 countries moving forward please
China, Israel, Taiwan, Germany and Qatar!

67 Likes 5 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by WhizdomXX(m): 10:28am On Aug 31, 2020
Seriously, we need to save this Country. All these old men have been doing is 1 step forward 10 steps backwards. A lot of us are more educated than these parasites lording over us. It's a pity that greed has made us subject to them.

22 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 10:33am On Aug 31, 2020
WhizdomXX:
Seriously, we need to save this Country. All these old men have been doing is 1 step forward 10 steps backwards. A lot of us are more educated than these parasites lording over us. It's a pity that greed has made us subject to them.

I saw your comment on one of the threads earlier.
We pray Nigeria to be great, alas those managing her don not see her as such
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 10:34am On Aug 31, 2020
XXXXTENTACION:
Buhari is working hard cheesy


He is gradually turning Nigeria to Dubai undecided
Let me ask Lalastic.lala

1 Like

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by WhizdomXX(m): 11:17am On Aug 31, 2020
iwaeda:


I saw your comment on one of the threads earlier.
We pray Nigeria to be great, alas those managing her don not see her as such
Thank you while praying we should also work hard. The next cycle of elections are 3 years away and while most are here calling each other names( mainly due to poverty), these guys are planning for the futures of their 8th and 9th generations. What are we then planning for ourselves not to talk of our generations unborn??

5 Likes 2 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 11:24am On Aug 31, 2020
WhizdomXX:

Thank you while praying we should also work hard. The next cycle of elections are 3 years away and while most are here calling each other names( mainly due to poverty), these guys are planning for the futures of their 8th and 9th generations. What are we then planning for ourselves not to talk of our generations unborn??

When you buy fuel of N2628 never pay N3000, let the attendant knows his mistake, so that he will not defraud others.

4 Likes 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by WhizdomXX(m): 11:39am On Aug 31, 2020
iwaeda:


When you buy fuel of N2628 never pay N3000, let the attendant knows his mistake, so that he will not defraud others.
Of course he knew his mistake, in his mind he played a fast one but I just decided on helping him. Who knows maybe that's what he'll use for supper. My point is that same person would be insulting Buhari as the source of his problems, it's an irony.
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 12:46pm On Aug 31, 2020
WhizdomXX:

Of course he knew his mistake, in his mind he played a fast one but I just decided on helping him. Who knows maybe that's what he'll use for supper. My point is that same person would be insulting Buhari as the source of his problems, it's an irony.

You just encouraged him to do more.

Something like that happened to me, I bought fuel around Obanikoro inside car and later in the jerry can. When he finished selling in the car. He told me he rubbed off before selling in the jerry. I told him he couldnt have sold N5000 so quickly. He completed my money o.

4 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 12:47pm On Aug 31, 2020
Our system is too caustic.
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by BlackfireX: 12:52pm On Aug 31, 2020
What punishment will I give myself for voting in and cajoling people to vote for this chaos of a govt

7 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by Lipscomb(m): 12:53pm On Aug 31, 2020
Atiku you supported could have done worst.
GamalNasser:
We warned y'all that the dull poorly lettered nepotic corrupt herdsman has nothing nothing to offer Nigeria but zombies no gree here ...Please can someone mention just one indice Buhari has gotten right ..This can't be an error again because after 5 years there must be atleast something Buhari can show that he is doing right but there is absolutely none
Re: More Foreign Investors Leave As FPI Flows Crash By 228% by iwaeda: 12:54pm On Aug 31, 2020
BlackfireX:
What punishment will I give myself for voting in and cajoling people to vote for this chaos of a govt

Forgive yourself

1 Like 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by GamalNasser: 1:02pm On Aug 31, 2020
Lipscomb:
Atiku you supported could have done worst.
How can anybody be possibly worse than Buhari ?

Even you will do 1000 times better please ..Forget politics oo Buhari is a bad leader

29 Likes 1 Share

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by airoport: 1:15pm On Aug 31, 2020
iwaeda:


You just encouraged him to do more.

Something like that happened to me, I bought fuel around Obanikoro inside car and later in the jerry can. When he finished selling in the car. He told me he rubbed off before selling in the jerry. I told him he couldnt have sold N5000 so quickly. He completed my money o.
You did well! To me, that's another form of evangelism. Getting people to do what is right. I returned to one filling after I noticed I was shortchanged, for the gauge only slightly moved.I got my money's worth after firm/very direct complaint/threat of unsavoury consequences. I don't tolerate or condone extortion/thieving!I can give if asked or I'm the mood, but will never accept blatant cheating.
BTW, we need a thread to address these errors at our service points whether filling station, shops etc. This cunning culture can even drive away foreign investors.

8 Likes 2 Shares

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by CoalcityBoi: 1:32pm On Aug 31, 2020
Vote people like Peter Obi, Fashola,Dave Umahi, or Adesina for a true transformation

2 Likes

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by solamakinde1: 1:32pm On Aug 31, 2020
What a country!

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by jericco1(m): 1:32pm On Aug 31, 2020
Nigeria under Buhari has become something else. The thing no just follow

1 Like

Re: More Foreign Investors Leave As FPI Flows Crash By 228% by Built2last: 1:33pm On Aug 31, 2020
This is the reason.

We were on 205 to the dollar till change agents came.

4 Likes

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