SEC blames lingering FX crisis on rising foreign investment outflows
The Securities and Exchange Commission (SEC) has blamed the lingering foreign exchange (FX) crisis on the steep dive in foreign investment inflow in recent years and the recent outflow of funds from the economy.
Last year, capital importation inflow dropped by 20.47 per cent to $5.3 billion, the lowest in about a decade. The figure crossed $20 billion in the good days but went south recently following rising insecurity, rigid FX management and other factors.
SEC also said the difficulty is accessing dollar is a major factor impeding foreign investors’ patronage of the equities, saying the market control is at just 16 per cent.
At the post-Capital Market Committee (CMC) virtual meeting, yesterday, the Director-General of SEC, Lamido Yuguda, said the prevailing dollar shortage, which has continued to affect dividend repatriation is a major challenge to foreign investors.
Indeed, foreign participation in the local bourse has so far moderated in recent years due to forex liquidity and monetary policy, placing their participation at 16 per cent according to the December 2022 edition of the domestic and foreign portfolio investment report.
“We all know that we are having some challenges with the foreign exchange situation in Nigeria, the international investors who have invested are having some delays in accessing foreign exchange in the repatriation of their dividends or capital and because of this, we are seeing a reduced proportion of foreign investors in the Nigerian capital market relative to what this market has been used to,” the DG said.
However, he expressed optimism that with the coming onstream of Dangote refinery, which is expected to ease the importation of refined petroleum products, in addition to various initiatives put in place to boost the non-oil sector, the nation’s forex situation would substantially improve.
If we have a higher generation of forex from the non-oil sources and a reduced utilisation to import refined petrol, these two avenues will give a much better situation where we can now use a greater availability of forex to meet the needs of investors who are interested in taking advantage of the economic potential that exists in Nigeria. It is not a situation that has no solution but the solution is in various stages of development,” he said.
Yuguda also assured that the commission was working at ensuring that foreign and retail investors were retained and more attracted to the capital market, stating the NGX has performed very well, relative to other emerging markets in the continent.
On the issue of delisting of companies from the exchange, Yuguda said the commission would continue to ensure fair valuation of shares of companies applying for delisting to protect investors and boost confidence in the market.
“Protection of investors is the central mandate of the Commission and when the Commission protects investors, we do not discriminate between minority and majority shareholders,” he said.
Also to restore investors’ confidence in the market, Yuguda said the Investment and Securities Bill (ISB), which is currently awaiting the President’s assent would be signed into law before the end of the current administration.
The SEC boss disclosed that the ISB has a whole session of provisions on regulations of the commodities ecosystem, noting that the passage of the bill would enable Nigeria to trade its commodities in other organised exchanges and expand the market.
Meanwhile, the nation’s bourse extended losses yesterday as overall market capitalisation depreciated by N5 billion.
The all-share index (ASI) decreased by 8.83 absolute points, representing a dip of 0.02 per cent to close at 51,944.58 points. Similarly, the market capitalisation lost N5 billion to close at N28.295 trillion.
The downturn was impacted by losses recorded in medium and large capitalised stocks, amongst which are; May & Baker Nigeria, Zenith Bank, Nigerian Exchange Group, Fidelity Bank and Africa Prudential.
Also, market breadth closed negative, with 18 gainers versus 21 losers. Transnational Corporation (Transcorp) recorded the highest price gain of 10 per cent to close at N1.54 kobo. Wapic Insurance followed with a gain of 9.69 per cent to close at 42 kobo, while Champion Breweries rose 7.64 per cent to close at N4.93 kobo.
Mutual Benefits Assurance went up by 6.25 per cent to close at 34 kobo, while Prestige Assurance appreciated by 5.26 per cent to close at 40 kobo.
On the other hand, May & Baker Nigeria led the losers’ chart by 10 per cent to close at N4.05, per share. Ikeja Hotel followed with a decline of 9.24 per cent to close at N1.08, while Multiverse Mining and Exploration lost 7.6 per cent to close at N2.31
Academy Press lost 6.67 per cent to close at N1.26, while NPF Microfinance Bank shed 6.32 per cent to close at N1.78 kobo.
However, the total volume traded rose by 18.72 per cent to 302.92 million units, valued at N2.023 billion, and exchanged in 3,743 deals. Transactions in the shares of Transcorp topped the activity chart with 107.213 million shares valued at N162.832 million. Fidelity Bank followed with 39.308 million shares worth N206.008 million.
United Bank for Africa (UBA) traded 22.603 million shares valued at N190.356 million. Zenith Bank traded 20.614 million shares valued at N521.286 million, while FCMB Group transacted 12.61 million shares worth N47.83 million.