Prompted by tumbling oil prices which began in H2- 2014, foreign portfolio (FPI) players were net sellers of Nigerian stocks for most of 2014, 2015 and H1- 2016. The outflows started reversing from June 2016, following currency market adjustment by the CBN. By April 2017, FPIs started flooding into the market at record levels on the backdrop of the introduction of the market-friendly investors and exporters FX window (I & E window) which ushered in a new era of improved FX liquidity and restored investor confidence in the Nigerian market. Accordingly, Nigerian equities appreciated 42% in 2017.

Nevertheless, looking at the recent trend of foreign flows, it appears that foreign appetite for Nigerian stocks has waned. From Dec-2017 till date, FPI flows into equities has sustained a downtrend, despite a substantial rally in global oil market during the period. Typically, one would have expected some net-buying from FPIs during this period.

We believe that profit taking and concern over the upcoming election is stoking the sell-offs. Furthermore, though foreign investors seem to be more at ease with the Nigerian market since the introduction of the I & E window, they would continue to root for a unified exchange-rate system that is predominantly driven by market forces.

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