Mustapha Wahab, market analysts at Cordros Capital, has said that despite capital importation losing $715 million, dropping for the fourth straight quarter in Q4 2018, there will be a resurgence in capital flows in 2019.
Wahab hinged his projections on a more loose monetary policy stance across the globe among other factors.
He said, “looking ahead, I believe the mix of pull and push factors leave scope for a sizeable resurgence in capital flows over 2019, we expect a looser global monetary policy landscape, which should drive lower yields in the advanced market, we also expect a weaker global growth, and possible trade deal between U.S and China, which will drive renewed demand for emerging market (EM) risk assets.”
“On the domestic front, in the light of the clearer election direction, attractive equities market relative to peers, elevated yield environment, and the still stable and liquid FX market, I believe flows to naira assets will come in stronger going forward,” Wahab added
The Nigerian Bureau of Statistics released data on capital importation for Q4 2018, showing that capital flows into the Nigerian economy dipped for the fourth straight quarter in Q4 2018, but expanded over the year 2018 relative the prior year’s reading.
The NBS data pointed out that total flows of $2.14 billion achieved over the quarter are $715 million and $3.24 billion lower quarter-on-quarter and year-on-year respectively. However, the 2018FY paints a rosier picture, with the Bureau reporting a whopping a $16.8 billion over 2018, $4.6 billion higher relative to the total flows recorded in the corresponding period of last year.
Focusing on Q4 2018, it was noted that Foreign Portfolio Investment (FPI), which accounts for 65 percent of total flows, went down 19 percent quarter-on-quarter to $1.39 billion, while Foreign Direct Investment (FDI) and Other investment moderated by 70.6 percent quarter-on-quarter and 2 percent quarter-on-quarter to $156.1 million and $589.3 million, respectively.