Naira Devaluation Draws Foreign Investors Back to Nigeria's Stock Market
- Nigeria's stock market appears to be rejuvenated as foreign investors return amid naira devaluation
- Since the resumption of the administration of President Bola Tinubu, the stock market has experienced a resurgence
- Nigerian stocks have already positioned themselves as one of the top-performing assets globally
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The recent devaluation of Nigeria's currency, the Naira has resulted in a resurgence of foreign investor interest in the country's stock market.
In the past month, there has been a significant increase in overseas investment flows following the decision by President Bola Tinubu's administration to permit a 40% depreciation of the Nigerian currency, as revealed by data from the Nigerian Exchange in Lagos.
Source: UGC
The choices made were positively received by investors, resulting in a favorable market position that contributed to the growth in the stock value of Nigerian companies.
Although the devaluation initially lowered the foreign-currency value of the benchmark index, the influx of investment has helped offset that impact, resulting in a notable 7.5% recovery over the past two weeks, Bloomberg reports.
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Investors can find reassurance in historical evidence indicating that currency devaluation, despite causing temporary challenges, has the potential to enhance stock values and stimulate investment flows in the long run.
Adetilewa Adebajo, chief executive of Lagos-based CFG Advisory, said that it only takes for government to apply good policies for foreign investors to be attracted to Nigerian stocks.
He said:
Foreign investors are coming now because they believe they are taking a position on the future. If the government comes out with a good budget, oil prices stabilise, crude production goes up, foreign exchange becomes more available, those will be good signals for foreign-investor participation and the positive market movement will be sustained.
In terms of local currency, Nigerian stocks have already positioned themselves as one of the top-performing assets globally.
The recent evaluation of global currencies indicates that Nigeria's national currency, the Naira, has exhibited significant improvement, moving away from its previous position among the worst-performing currencies globally.
Despite not being the most favored candidate during the February elections, President Bola Tinubu's administration has astounded investors with its commitment and successful implementation of various economic reforms.
Nigerian stock market hits 15-year high
In related news, Legit.ng reported that on Tuesday, June 13, 2023, the Nigerian stock market witnessed remarkable growth, as its market capitalization surged by 4% (equivalent to N1.22 trillion), reaching a total of N31.6 trillion.
The notable rebound was attributed to investors' optimistic response following the suspension of Godwin Emefiele, the Governor of the Central Bank of Nigeria (CBN), by President Bola Tinubu.
In line with this positive trend, the benchmark all-share index also experienced a 4% increase, rising by 2,232.58 points to close at 58,163.55 points.
Moreover, the market displayed enhanced investor confidence, evident in a significant rise of 55% in the value of deals transacted, accompanied by a substantial increase of 106% in trading volume compared to the previous trading day.
Source: Legit.ng
