Financial analysts are optimistic about a rebound in both foreign and domestic investments in Nigeria’s capital market, citing recent government policy reforms and improved investor sentiment as key drivers. A stable economic environment is expected to boost participation from local and foreign investors, but challenges like inflation, interest rates, and FX volatility must be addressed for sustained growth.
Bisi Bakare, National Coordinator of the Pragmatic Shareholders Association of Nigeria, notes that the recent decline in transactions is a temporary realignment of investor appetite. “Investors are adjusting to emerging opportunities, and recent government initiatives have begun stimulating market activities,” she says.
The Nigerian stock market recorded a total domestic transaction value of N2.5tn for the first half of the year, with local investors dominating foreign counterparts. Bakare attributes this shift to policies fostering economic stability and a favorable business environment.
However, analysts caution that macroeconomic factors like inflation and exchange rate stability are crucial for market growth. Rotimi Fakeyejo, a financial analyst, warns that the resurgence of capital inflows could be short-lived if key economic challenges remain unaddressed. He notes that global economic conditions and foreign exchange volatility pose risks for foreign investors.
Despite concerns, analysts believe investors can capitalize on opportunities in the primary market, particularly with ongoing bank recapitalization efforts. They advise investors to tread cautiously, considering the impact of rising inflation and high interest rates on company margins.
