Despite the bullish sentiments on the floor of the Nigerian Stock Exchange (NSE), Foreign Portfolio Investments (FPIs) will likely remain on the sidelines for long as investors adopt a wait-and-see approach amid elevated currency risk.
This was the view of market analysts at Cordros Research in their report: Likely Impact of the Ongoing Social Unrest on the Economy and Markets. According to them, social unrest creates fear and uncertainty in the mind of investors who are concerned about safeguarding their assets and protecting themselves from any possible fallout of the unknown.
They further noted that the scope for fresh inflows from FPIs through the I & E window appears limited and there is now a damage to Foreign Direct Investments (FDIs) despite the bullish run seen on Customs Street in the past trading sessions.
Senior Research Analyst at Cordros Capital, Gbolahan Ologunro, said: “We had already anticipated a knee jerk reaction from investors with the unrest, but the past few trading sessions have seen investors taking advantage of the sell-offs by picking stocks at attractive entry points along with good earnings released to the investing community. This is good news for stock market investors.
“We, however, note that FPIs will likely remain on the sidelines as investors adopt a wait-and-see approach amid elevated currency risk. As a result, the scope for fresh inflows from FPIs through the I & E window appears limited. Consequently, we see no respite for accretion to the CBN’s external reserves amid lower oil sale receipts.”