More foreign investors dropped Nigerian stocks in 2019 amidst dwindling hope for reforms that could boost Africa’s biggest economy.
According to latest report released by the Nigerian Stock Exchange, the value of Nigerian stocks bought by foreign investors dropped from N1.22 trillion in 2018 to N942.55 billion as at the end of 2019.
Investors increased the pace of outflows last year after President Muhammadu Buhari took office for the second term but failed to appoint a cabinet until months later.
Funds sold out of the banking, consumer and oil sectors as capital flight worsened, piling pressure on the naira.
Similar to stocks, investors also cut their participation in Nigerian government bond auctions last year. Instead, they piled into treasury bills supported by central bank’s policies.
Reacting, a stockbroker, Funso Oluwole, explained that the President has pursued protectionist policies since he took over office in 2015, a development he said does not help the economy and scare some foreign investors.
He said, “Introducing policies that curb imports to boost local production is a good one but backing a currency intervention that has seen the central bank pump billions of dollars into the foreign exchange market will not last long.
“With the modest increase in the National Minimum Wage still yet to take effect, the CBN simply cannot continue to defend the Naira at current levels. I expect the government to be forced into the hard choice of devaluing the currency sometime within the first half of 2020.”
“The year 2020 has started on a good note, with the NSE ASI recording a 9.41% improvement year-to-date as at January 10. We intend to work closely with our stakeholders to sustain this growth trajectory.
