Foreign investments drop by 32% in one month

Foreigners have reduced their investments in the Nigerian Stock Exchange due to concern about insecurity and fears regarding the outcome of 2015 elections.

The latest investment details from the NSE showed that foreign investments dropped significantly by N73.4 billion at the end of October.

As of September this year, the total investments by foreign investors stood at N226.68 billion.

The document obtained from the NSE on Friday indicated the amount dropped to N153.28 billion by October ending. This showed a difference of N73.4 billion or 32 per cent.

Some capital market experts said the consistent reduction in foreign investments was partly due to increasing security concerns as well as tight monetary policies of the Central Bank of Nigeria.

They also said the various activities of the extremist Islamic sect, Boko Haram, as well as the upcoming general elections must have contributed substantially to the reduced investments by the foreigners.

The statistics also showed that domestic investments in the period under review fell significantly.

The local investment, which stood at N296.06 billion as of September 2014, dropped by N274.24 billion or 92.6 per cent to N21.82 billion.

The general reduction of both foreign and local investments, according to experts, has led to a major depression in the capital market as the NSE’s All-Share Index, which measures the performance of the equities on the Exchange, has recorded significant decline.

The Managing Director and Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, who said the factors leading to the drop were both external and internal, explained that the trend was likely to continue until the second quarter of 2015.

He said, “The factors driving the bear run seem to be worsening. They are declining oil prices, depleting reserves, termination of quantitative easing, likely further tightening of monetary liquidity by the central bank and a possible two-horse unpredictable presidential election in February 2015.

“These factors are most unlikely to reverse in the last quarter of this year. It is, therefore, most probable that the equities market will not recover from its current loss position this year. The earliest time one should expect a rebound is the second quarter of 2015; and this is subject to the outcome of the general elections.”

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