The anxiety over the outcome of the 2015
elections has exacerbated economic and
political risks in the country, resulting in
foreign investors pulling N846.53 billion
from the Nigerian Stock Exchange (NSE)
in 2014.
The figure represents 65.7 per cent
increase on the N510.78 billion foreign
portfolio investment outflow from the
stock market in the corresponding period
of 2013.
The NSE polls trading figures from major
custodians and market operators on their
Foreign Portfolio Investments (FPI).
On the contrary, total foreign inflow in
2014 was up 30.32 percent to 692.39
billion from N531.26 billion in 2013.
According to NSE, total transactions at
the nation’s bourse increased by 41.83
per cent from N181.97 billion recorded in
January to N258.08 billion in December
2014.
According to capital market analysts, the
exit of foreign investors from the equities
market was a major reason for its poor
performance in 2014 during which the
market closed with a negative return of
16.14 per cent.
They noted that foreign investors were
exiting the Nigerian stock market due to
the falling global oil prices, activities of
insurgents in the north east of Nigeria,
the fear of the outcome of 2015 general
elections and the devaluation of the
naira.
Chief executive officer, Highcap Securities
Ltd, Mr. David Adonri, explained that the
sustained sell-off and outflow resulted
from the unexpected continued decline in
the prices of crude oil in the international
market and increasing political risks in the
country.
NSE chief executive officer, Mr. Oscar
Onyema, confirmed that the outflow was
a major factor in the poor performance of
the market.
“In the capital market, bearish sentiments
prevailed for most of the year as foreign
investors steadily withdrew from the
Nigerian market due to currency risk and
the recovery of developed economies, and
the effects of the US Federal Reserve
tapering off its quantitative easing policy,”
Onyema said.
He added that the air of uncertainty that
hovered over the Nigerian capital market
throughout 2014 caused investors to
increasingly adopt a ‘flight to quality’
strategy.
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