Another Large Injection of Portfolio Monies


Thursday, April 12, 2018 / 09:15 AM / FBNQuest Research

We said yesterday that we were comfortable with a current-account surplus/GDP ratio in the low single digits because of the ability of the FGN to tap the Eurobond market and of Nigeria to attract offshore portfolio monies. 

Our second point is highlighted by the financial account in the balance-of-payments (BoP) for Q4 2017, above all by the gross investment inflows (ie those in the reporting economy before investment by Nigerian residents offshore). Gross direct, portfolio and other flows together totaled US$4.77bn, compared with US$4.94bn in Q3.

Direct investment in 2017 amounted to US$3.5bn, equivalent to 0.9% of GDP. This is poor by any criteria. Notwithstanding some welcome steps up the league table in the World Bank Group’s Ease of Doing Business 2018, the FGN has far to go in selling the Nigeria story to long-term investors. 

The short-term prospects are far better for portfolio flows, which have responded well to the NAFEX experiment. Many offshore players have returned to local markets under the experiment because they are comfortable that they will be able to exit when they choose. They know well that conditions could change dramatically with a sharp fall in the oil price or another external shock. Such is not our current expectation. 

When we adjust for the assets on the financial account (Nigerian investment offshore) in Q4, two of the three components remain positive on a net basis: direct investment of US$640m and portfolio investment of US$3.78bn. There was a net outflow of US$2.10bn on other investment.  

Proshare Nigeria Pvt. Ltd.

The broader picture for the BoP in Q4 2017 shows a current-account surplus of US$3.66bn and a financial-account deficit including the movement in reserves of US$3.86bn. These are balanced by net errors and omissions of just US$200m.

Proshare Nigeria Pvt. Ltd.

Related News

  1. Toward a Healthier Current Account
  2. Nigeria’s GDP Grows in Real Terms by 1.92% in Q4 and 0.83% for Full Year 2017
  3. Q4 2017 GDP Expectation: Oil Sector to Bolster Economic Growth
  4. Q4’17 GDP: Seasonal Rebound in the Non-oil Sector Strengthens Economic Recovery
  5. Nigeria’s Merchandise Trade Declined Marginally QoQ but Increased YoY for Q4 2017
  6. Total Value of Capital Imported into Nigeria in Q4 2017 Estimated at $5,382.89m - NBS
  7. Nigeria Q3’17 Trade Report - Oil Exports Lift Current Account To 3-Year High
  8. A ‘Black Panther’ Moment For Nigeria
  9. Small Boost to The Current-Account Surplus
  10. Foreign Trade Review Q3 2017 - Trade Balance Surge on Rising Exports
  11. Nigeria’s Merchandise Trade Grew Marginally Q-on-Q But Significantly Y-on-Y in Q3 2017
  12. Nigeria Capital Importation: Christmas Comes Early As Q3’17 Inflows Spike
  13. Effective Reporting of the Travel and Tourism Industry Using Appropriate Data
  14. Total Value of Capital Imported into Nigeria in Q3 2017 Estimated at $4,145.1m - NBS
Related News