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00:00Data by the National Bureau of Statistics shows that foreign direct investment into Nigeria fell to
00:0629.8 million dollars, contributing about 1.15% of total capital importation in the review period.
00:14Victor Lui, the head of investment and Saekura Global Investments, joins me now,
00:19but we'll take a look at how the local burst is faring this afternoon,
00:23as we look at stock price movements at the Zaire.
02:00And that's a snapshot of activities at the Nigerian equities market.
02:13We've re-established connection with Victor Lui, the head of investment at Saekura Global Investments.
02:18He joins me now for more on our capital importation data.
02:21Thanks a lot for joining us on the show today, Victor.
02:23Let's talk about your reading of the numbers here.
02:26We're seeing an increase in the volume of capital importation that's up about 152.8%.
02:32However, when we look at the segmentation, foreign portfolio investment and then foreign direct investment,
02:39this swing still tilts to the regular narrative.
02:43Would you say investors are still on the edge as well?
02:54Can you hear me, Mr. Lui?
02:58Okay, I can hear you now.
03:00Yes, so I'm talking about your reading of the capital importation data.
03:04And would you say investors are still on the edge?
03:10Well, I mean, it's just a reflection of the economic situation we find ourselves in.
03:16It came in higher than what we had in the second quarter of last year.
03:21But if you look at that number, quarter on quarter, it declined about 22% from our 3.3 billion that we had in the first quarter of this year.
03:29Again, portfolio investment accounted for the largest chunk.
03:33And that has always been the case, really.
03:35Even if you look back as far as 10 years ago, portfolio investment has always been the largest portion of the capital importation reports.
03:43It accounted for about 54%.
03:45But I think what is even important to point out here is the fact that FDI inflow was very, very weak.
03:50It came in at just about 29%.
03:52And that is the weakest number we've seen since the beginning of 2023.
03:56So this is obviously reflecting of the economic situation.
04:00And obviously, you know, the thought of foreign investors on the investing climate, particularly in Nigeria.
04:08However, the portfolio investment ascendancy that we're seeing is obviously on the back of the higher fixed income yields that we've seen, particularly this year so far.
04:19As a matter of fact, if you look at the portfolio investment portion of that report, money market investment accounts for about 77% of that 1.4 billion number that has come through for portfolio investments.
04:32So clearly, this report is just reflective of the investment environment that we have.
04:37I mean, fixed income yields have risen very strongly this year.
04:41If you compare to December of last year, for instance, as a cross-border fixed income yields are obviously about 12% on average.
04:48So that has attracted, you know, quite some funds coming through.
04:52But if you look at the real sectors of the economy, FDI has remained, you know, really, really weak.
04:58And that really, you know, remains a concern.
05:01Definitely, this remains a concern as well now.
05:03But let's talk about how we are seeing the global developments also shape the sort of attractiveness we see in our markets here.
05:10We're looking at global shocks as the Middle East tensions continue to escalate.
05:15We're also seeing some adjustments in terms of global central bank moves as well.
05:19The CBN here also maintains its hawkish stance for you.
05:23How would you say our markets are attractive at this point in time and near to movements you expect?
05:32Well, I mean, a lot of people have said that, you know, the expectation of interest rate costs,
05:39particularly in, you know, the developed markets, should have some positive impact on our own market and also in terms of flows.
05:46But I don't quite agree with that.
05:48If you look at the U.S., for instance, yes, there's been a rate cut.
05:51Nevertheless, rates are still quite high.
05:54We're seeing probably the highest rates in the last 10 years in the U.S.
05:58So the level of attractiveness in U.S. markets is still there.
06:03So they are not at the point yet where they are beginning to think about looking for yields elsewhere.
06:08Also, I think our price stability issues will continue to remain a concern for foreign investors
06:15until there is a great semblance of stability in terms of where the Naira is, a great semblance of liquidity in that market.
06:24Capital inflows by way of monetary policy implementation in the developed West will not have a significant impact on our own markets.
06:34Yes, and we're already in the last quarter of the year.
06:36We're still asking this question.
06:38Where lies the fair value of the Naira?
06:40What's your outlook for the local currency?
06:42And what's your peg?
06:43Where would you peg it at as we are gradually wrapping up the year?
06:47I mean, it's difficult really to say where the Naira should be at.
06:52At the end of the day, the value of the Naira is a reflection of the strength of the economy.
06:56The monetary authorities would need to intervene to ensure that the level of volatility does not get out of hand.
07:03We clearly need to ramp up our means of gaining or earning foreign exchange.
07:11So one of the low-hanging fruits is obviously our oil production.
07:14We need to ramp that up. Oil prices have been in the ascendancy for quite a while.
07:18We obviously have not been able to take advantage of that.
07:21It's highly pertinent that we do that in this situation and be able to nip in the bud the prices,
07:26the stability challenges that we continue to face, particularly on the FX currency.
07:30I mean, it's really tough to say where the Naira pegs.
07:33Like I said earlier, it really is a function of the strength of our economy.
07:38Well, we'll have to leave the conversation here for now.
07:40Thank you so much for your time on the show today, Victor.
07:42That was Victor Oluye, the Head of Investment at Sankore Global Investment.