Economy
Equity, Bond Markets Buoy Nigeria’s $12b Capital Inflow in 2017
By Modupe Gbadeyanka
The total value of capital imported into the country in 2017 increased significantly when compared with two years ago.
According to figures released by the National Bureau of Statistics (NBS) few days ago, a total of $12.2 billion was attracted into Nigeria in 2017, an increase of $7.1 billion or 138.7 percent from the figure recorded in 2016.
The stats office said in its report that the growth in capital importation in 2017 was mainly driven by an increase in portfolio investment, which went up by $5.5 billion from the previous year to reach $7.3 billion in 2017, and accounting for 60 percent of capital imported.
During the reference quarter total capital imported when compared with the previous quarter increased by $1.2 billion, the NBS said.
In the fourth quarter alone, the capital inflow was $5.4 billion, representing an annual growth of 247.5 percent, and quarterly growth of 29.9 percent.
During the quarter, portfolio investment, which recorded $3.5 billion, remained the largest component of capital imported and contributed 64.6 percent of the total amount, $5.4 billion.
It increased significantly year on year, recording a rise of 1,123.5 percent or $3.2 billion from $284.2 million to $3.5 billion, expanding faster than the two other components of capital importation; Foreign Direct Investment (FDI) and other investments.
In the fourth quarter of last year, Foreign Direct Investment recorded $378.4 million, which is a year on year increase of 9.8 percent, while Other Investment recorded $1.5 billion, growing by 66 percent when compared with the fourth quarter of 2016.
According to the NBS, in Q4 2017, Foreign Direct Investment hit $378.4 million for the first time since Q4 2015 when it reported $123.2 million. This figure in Q4 2017 was a substantial increase of 221.8 percent when compared to the 3rd quarter, and a 9.8 percent increase compared to Q4 2017. The growth in FDI was mainly driven by Equity Investments, which contributed 99.8 percent, while Other Capital Investment contributed 0.2 percent.
Furthermore, the stats office said Portfolio Investment was the main driver of Capital Importation in the fourth quarter of 2017, with an amount of $3.5 billion, representing a quarter on quarter growth of 25.7 percent.
Year on year, it increased by 1,123.5 percent, which is over 12 times the figure recorded in Q4 2016, $284.2 million.
The increase in Portfolio Investment was driven by a strong growth in Money Market Instruments, which recorded $2.2 billion, the first time since Q3 2013.
Money Market Instruments contributed 63 percent to Portfolio investments. Equity, which had been the main driver of Portfolio investments in previous quarters, dropped by $942.9 million from $1.9 billion in Q3 to $989.2 million in Q4 2017.
On the other hand, Bonds recorded an increase of $194.1 million, from $115.4 million in Q3 to $309.5 million in Q4 of the same year.
Also, Other Investment accounted for 28.4 percent of total capital importation in the fourth quarter of 2017. This category of capital importation grew 65.96 percent year on year, and by 21.2 percent when compared to the previous quarter.
The $1.5 billion recorded by Other Investment was mainly in the form of Loans, which was $1.1 billion in the fourth quarter, followed by Other Claims which recorded $425.7 million, and then Trade credits which reported $10 million, having posted no inflows since Q4 2016.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.69 per cent appreciation on Monday, January 13, as investors showed renewed interests in unlisted securities.
During the trading session, the NASD Unlisted Security Index (NSI) increased by 21.07 points to wrap the session at 3,095.00 points compared with the 3,073.93 points recorded in the previous session.
In the same vein, the value of the local alternative stock exchange went up by N7.22 billion to close at N1.061 trillion compared with last Friday’s N1.051 trillion.
Yesterday, FrieslandCampina Wamco Nigeria Plc recorded a growth of N3.78 to close at N42.00 per share versus N38.22 per share, Mixta Real Estate Plc improved by 20 Kobo to end at N2.35 per unit versus the preceding closing rate of N2.15 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to finish at 25 Kobo per share compared with the previous session’s 24 Kobo per share.
Conversely, Geo-Fluids Plc lost 29 Kobo to quote at N4.56 per unit compared with the preceding day’s N4.85 per unit, and Afriland Properties Plc slid by 75 kobo to end the session at N15.50 per share versus the preceding closing rate of N16.25 per share.
During the session, the volume of securities traded decreased by 27.2 per cent to 3.1 million units from 4.3 million units, the value of securities slumped by 81.5 per cent to N3.2 million from N17.2 million, and the number of deals expanded by 57.9 per cent to 30 deals from 19 deals.
At the close of trades, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and IGI Plc with 10.7 million units sold for N2.1 million.
Also, IGI Plc remained the most traded stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira recorded a 0.38 per cent or N5.86 depreciation on the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 13 to close at N1,548.89/$1, in contrast to the preceding session’s N1,543.03/$1.
The local currency weakened further in the official market yesterday as the deadline to cut off Bureaux De Change (BDC) operators from the Electronic Foreign Exchange Matching System (EFEMS) built to enhance transparency in the FX system looms.
Recall that the Central Bank of Nigeria (CBN) in December opened a 42-day window to allow BDCs to buy FX worth $25,000 per week from the spot market.
However, the domestic currency appreciated against the Pound Sterling in the official market on Monday by N11.87 to trade at N1,877.43/£1 compared with last Friday’s N1,889.29/£1 and against the Euro, it improved its value by N4.94 to close at N1,578.87/€1, in contrast to the previous trading day’s N1,583.81/€1.
A look at the parallel market indicated that the Nigerian Naira slumped against the greenback yesterday by N5 to sell at N1,655/$1 compared with the preceding session’s N1,650/$1.
In the cryptocurrency market, large positive outcomes came even as risk assets weighed the possibility of US Federal Reserve rate cuts in the wake of Friday’s hotter-than-expected US jobs report.
The biggest gainer was recorded by Dogecoin (DOGE) as it rose by 3.9 per cent to sell at $0.3422, Bitcoin (BTC) grew by 0.9 per cent to trade at $94,843.98, Binance Coin (BNB) appreciated by 0.8 per cent to sell for $687.84, and Solana (SOL) recorded a 0.8 per cent growth to quote at $185.24.
Further, Ripple (XRP) increased its value by 0.7 per cent to close at $2.53, and Cardano jumped by 0.3 per cent to settle at $0.9469.
On the flip side, Ethereum (ETH) depreciated by 1.9 per cent to finish at $3,159.52, and Litecoin (LTC) went down by 0.9 per cent to close at $98.68, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices rose on Monday as Chinese and Indian buyers sought new suppliers after the administration of President Joe Biden of the United States imposed toughest sanctions yet on Russian energy.
Last Friday, the US Treasury Department imposed sanctions on Gazprom Neft and Surgutneftegas, as well as 183 vessels that traded oil as part of Russia’s so-called “shadow fleet” of tankers. The move is expected to cost Russia billions of Dollars per month.
This pushed the price of Brent higher by $1.25 or 1.6 per cent yesterday to $81.01 per barrel and raised the US West Texas Intermediate (WTI) crude by $2.25 or 2.9 per cent to $78.82 a barrel.
As a result, Chinese and Indian refiners are seeking alternative fuel supplies as they adapt to the severe sanctions on Russian producers and tankers that are designed to curb the revenues of the world’s second-largest oil exporter.
The large sanction gives Ukraine and the US President-elect, Mr Donald Trump, leverage to reach a deal for peace in the almost three years war.
Market analysts note that these sanctions have the potential to take as much as 700,000 barrels per day of supply off the market, which would erase the surplus that we are expecting for this year.
On its part, Goldman Sachs estimated that vessels targeted by the new sanctions transported 1.7 million barrels per day of oil in 2024, or 25 per cent of Russia’s exports. The bank is increasingly expecting its projection for a Brent range of $70-$85 to trade.
The Vladimir Putin-led government said the sanctions risked destabilising global markets, and Russia would seek to counter them.
Many of the tankers named have been used to ship oil to India and China after previous Western sanctions. A price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.
Also, six European Union countries called on the European Commission to lower the price cap put on Russian oil by G7 countries, arguing it would reduce Russia’s revenue to continue the war while not causing a market shock.
However, weaker demand from major oil buyers, China, could have an impact on the tighter supply as data showed that China’s crude oil imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic.
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