₦airaland Forum

How I was just rushing ........

patani:
The comments shows most nairalander does not understand this write up. In other word, never take nairalander insults serious ( most are kids anyway) If you can not understand this, it shows you are still a baby interns of investment and equity creation. Can we have a forum for intellectuals on nairaland? @lalasticla (no one below age of 30 allowed to access)

Lolz dont let us discriminate we are all human. for those of you that don't understand they were just saying the boy should have not killed the snake so it would vomit cool money but he killed it and it turn to hot money

wellmax:
Dumb guys here on NL. Jambites maybe

And u think u re smart. Is it everyone here dat read economics or accounting? I'm a science student and never had anything to do with economics or accounting so how the hell am I suppose to understand what was written there? Maybe I should begin to dissect the holes in Andrew Wiles' original proof of Fermat's last theorem. Lets see how smart u re then

Go make your money any which way .Hire someone who understands this JARGON to invest it for you and if he doesn't make you RICH kill him

This is interesting!

Expect the inflow of hot money to reduce towards the electioneering period. Nigeria's capital market can be volatile.

You need to be smart.

BlackAce31:
And u think u re smart. Is it everyone here dat read economics or accounting? I'm a science student and never had anything to do with economics or accounting so how the hell am I suppose to understand what was written there? Maybe I should begin to dissect the holes in Andrew Wiles' original proof of Fermat's last theorem. Lets see how smart u re then

They way he'll be looking at you

patani:
The comments shows most nairalander does not understand this write up. In other word, never take nairalander insults serious ( most are kids anyway) If you can not understand this, it shows you are still a baby interns of investment and equity creation. Can we have a forum for intellectuals on nairaland? @lalasticla (no one below age of 30 allowed to access)

how much you get

BlackAce31:
And u think u re smart. Is it everyone here dat read economics or accounting? I'm a science student and never had anything to do with economics or accounting so how the hell am I suppose to understand what was written there? Maybe I should begin to dissect the holes in Andrew Wiles' original proof of Fermat's last theorem. Lets see how smart u re then

Bros even me dn confuse
Ordinary Newtonian physics dy gimme headache not to mention wetin u jus talk so....No man b highland of knowledge ooooo

To be honest, I didn't understand the post. Was thinking it's all these Yahoo boys they wanted to talk about.

mcfynest:
Well, it all depends on the angle ypu are looking at it from ... However no matter tgr angle, Don't let this distract you from the fact that The ting goes skrrrahh, pap, pap, ka-ka-ka Skidiki-pap-pap, and a pu-pu-pudrrrr-boom Skya, du-du-ku-ku-dun- dun Poom, poom, you dun know

She said take off your jacket
I told her man's not hurt
Never hot

Sanusi Lamido was responsible for opening the floodgates for hot air....ballooned the economy and pricked it with a pin....boom! Only problem is that it's now a cycle and the balloon is getting thinner each time,which makes it susceptible to....boom!

nairametrics:
https://nairametrics.com/hot-money-inflow-into-nigeria-where-it-started/

that explains a lot....
its not trickling to the grassroots n job. creation is in negative figs


what is being done about it though??
and Emefiele n Adeosun's plans on this..


The gravy train can only last so long


.

BlackAce31:
And u think u re smart. Is it everyone here dat read economics or accounting? I'm a science student and never had anything to do with economics or accounting so how the hell am I suppose to understand what was written there? Maybe I should begin to dissect the holes in Andrew Wiles' original proof of Fermat's last theorem. Lets see how smart u re then

Don't mind the he-goat. They forget some of us are engineers or scientists

bia nwokem, if u want to insult us tell us waka...which kain epistle be dis?

patani:
The comments shows most nairalander does not understand this write up. In other word, never take nairalander insults serious ( most are kids anyway) If you can not understand this, it shows you are still a baby interns of investment and equity creation. Can we have a forum for intellectuals on nairaland? @lalasticla (no one below age of 30 allowed to access)

with all your intellect you don't know where investment threads are. I see

Those of us who did political economy in school knows what hot money investment is all about. Don't quote me if you're trying to purchase jamb form.

nairametrics:
Despite this acknowledgement, they had no option but to hope that the economy will remain in good shape, until at least, FDI’s start to pick up. As the crash in oil prices that began in the summer of 2014 ensued, hot money once again found its way out of Nigeria, policy makers reacted poorly; leading to a crash of the naira, deepening of the economic crisis and eventually a recession.

https://nairametrics.com/hot-money-inflow-into-nigeria-where-it-started/

To those who have sense, the above we already know

It is only zombie wailers who thinks that it is PMB that brought Recession

patani:
The comments shows most nairalander does not understand this write up. In other word, never take nairalander insults serious ( most are kids anyway) If you can not understand this, it shows you are still a baby interns of investment and equity creation. Can we have a forum for intellectuals on nairaland? @lalasticla (no one below age of 30 allowed to access)

Some of us ain't 30 yet but we know alot more than the supposed '30'. So, reconsider.

Nairabet i know. Nairametrics no so much. I use speed rush enter to see what hot money is all about only to find people speaking in tongues

nairametrics:
Hot Money is another name for Foreign Portfolio Inflows into an economy
Latest report by the National Bureau of Statistics reveals hot money inflow topped $2.7 billion in the third quarter of 2017 and $3.4 billion year to date.

FPI’s has for the last 5 years dominated foreign investor inflows into Nigeria.
It hasn’t always been this way and we will explain why and when things changed
Foreign Investors once again poured hot money into Nigeria as Nigeria’s capital importation for the third quarter of 2017 soared to over $4 billion. This is the highest quarterly inflow of capital into the country since the fourth quarter of 2014.

Table 1

Where are investors putting their money

A quick glance at the table above reveals that over 50% ($2.7 billion) of these funds was directed to Foreign Portfolio Investments, FPI. Specifically, the funds were invested in the Nigerian Stock market, dominated by equities.

The impact is as expected, very positive. The stock market is up 41% year to date and remains one of the best performing in the world this year.

The increase in FPIs is largely due to the introduction of the Investor and Exporter Window by the Central Bank, in February this year.

Following the successful operations of the window, foreign investors have continued to pour in billions of dollars into a stock market that was battered by the exchange rate crisis. Not to be left out of the bonanza that is being enjoyed by Nigerian Banks, they also funneled money into the debt market, buying the Federal Government’s juicy interest rate offerings of FGN Bonds and Treasury Bills.

The flip side of an increasing capital importation driven by FPI’s is that the funds are not directed at the critical sectors of the economy where investments are needed.

Hot money, as the name implies, means the owners are one trigger away from repatriating their funds should there be any sign of the economy faltering again. Unlike FDI’s which are more difficult to repatriate, hot money come and go like a hurricane, leaving in its wake a battered currency and worse economy.

One will have to go back in time to understand the root of hot money into Nigeria and how it has now become a mainstay.

When FPI became > FDI

The Central Bank data on capital importation going as far back as January 2007, provides some answers.

[Pictorial Diagram]


Between 2007 and 2009, Nigeria attracted a significantly higher FDI compared to FPI. In 2008, total Foreign Direct Investment into the country was as high as $4 billion, as investors poured in money in response to Nigeria’s impressive GDP Growth rate.

Nigeria’s GDP Growth rate average 7.5% between 2007 and 2010 with nearly all sectors attracting significant FDI inflows.

So where did it all go wrong?

The switch

Nigeria started attracting a significant inflow of hot money in 2010 after the immediate
past CBN Governor, Sanusi Lamido Sanusi was appointed. In one of his major forex policy actions, he lifted the one year restriction placed on repatriation of foreign investments into Nigeria, giving Nigeria access to foreign capital. The restriction previously put in place by Soludo, dissuaded the repatriation of capital out of Nigeria.

Facing dwindling reserves (which had dropped from $43 billion in June 2009 when he was appointed Governor to about $37 billion a year after), Sanusi had to lift the restriction to attract more foreign capital.

This also coincided with a period where the United States and much of the West adopted Quantitative Easing (a policy that had governments pump money into markets as a stimulus). As US Government pumped capital at near zero rates, investors moved the funds to emerging markets like Nigeria where interest rates and returns were higher.

By the time the CBN’s policy kicked in by 2012, reserves had risen to $40 billion in September of 2012. It was no surprise that FPI rose from about $4.4 billion in 2011 to about $13. 4 billion in 2012. The growth was unprecedented and most of the funds poured into equities. By 2013, it had risen to $17.3 billion while FDI plummeted to $1.2 billion.

Policy response

The CBN knew that by opening the flood gates of capital importation and easy repatriation, the risk of hot money was real. In response, the CBN Monetary Policy Committee acknowledged the threat and gave assurances that it was under control

this increase reflected generally favourable commodity prices and inflows of capital in response to the removal of restrictions on repatriation and high domestic interest rates, as well as stable exchange rates. the committees noted the assurances that total “hot money” in the system is under strict surveillance and the bank is satisfied that the figure of us$5 billion does not pose a threat to financial stability in view of the current level of reserves. mpc of may 21, 2012

Same observation was made a few months later as a challenge potential large inflow of “hot money” resulting from further monetary easing in the us and europe and improved yield on fixed income instruments; september 18, 2012.

Despite this acknowledgement, they had no option but to hope that the economy will remain in good shape, until at least, FDI’s start to pick up. As the crash in oil prices that began in the summer of 2014 ensued, hot money once again found its way out of Nigeria, policy makers reacted poorly; leading to a crash of the naira, deepening of the economic crisis and eventually a recession.

Is Hot Money bad?

Whilst not the preferred form of capital for most economies, it remains one of the major source of capital flows into emerging markets. Despite being short-term, it helps countries meet their balance of payment obligations thus stabilizing exchange rate and attracting even more inflows. It is typically a risk when the economy experiences shocks as its withdrawals often leads to exchange rate crisis, like was witnessed between 2014 and 2016.

Nigeria needs FDI’s but will continue to struggle until it can solve its myriad of challenges. The government will have to get its fiscal policy right, while it promotes efforts at industrializing the economy. Nigeria’s power challenges will have to be sorted out as well as ramp up its efforts at improving ease of doing business.

These are all long-term solutions meaning that hot money will continue to remain the major source of capital importation for Nigeria for the next few years.
https://nairametrics.com/hot-money-inflow-into-nigeria-where-it-started/

Bump.


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