Analysts have said that there is likely to be increased foreign investment in the Nigerian capital market in 2013.

According to them, this will be driven by increased returns recorded in the equities market at the end of activities in 2012.

They said with the inclusion of the FGN Bonds in the JP Morgan Index and its planned inclusion in the Barclays index, more foreign investors would be attracted into the market.

Analysts from Meristem Nigeria Limited said that the strong fundamentals recorded by major companies in the second and third quarters of 2012 had also been a major driver of the increased activity in the market in the past month.

They also noted that investor-confidence was gradually returning to the equities market, as in  the recent positive sentiment displayed by investors.

They said, “Last week, the market broke the consensus analyst estimate on market performance as the index crossed its physiological 29,000 points barrier to hits another year high. The duo of positive investor sentiments and company fundamentals have induced a bullish trend in the Nigerian equity market as the Index recorded over 35 per cent rise compared to the previous year.

The analysts explained that there was increased participation by foreign investors in the Nigerian equity market, adding that the situation might remain the same in the next few months.

They said, “As sub-Saharan Africa markets continues to remain attractive destination to foreign portfolio managers, the Nigerian equities market presents an attractive with higher potential upsides than its peers at 36.4 per cent Year-to-Date stock market performance.

“Current rally witnessed in the equities market, in our opinion, was occasioned by the return of the foreign portfolio managers, who had long been on recess waiting for re-entry at support levels, and these investors took positions in some of the blue chips companies with attractive fundamentals.”

The President, Chartered Institute of Stockbrokers, Mr. Ariyo Olushekun, who confirmed this, noted that already, a lot of foreign investors were taking position in the equities market ahead of more expected rise in the market indices.

He said, “We are pleased to note that recovery has already commenced in our market and we are sure that this recovery would be sustained. Already, you would notice that we are having over 35 per cent year-to-date return in the market.

“All indications point to the fact that we are going to see even more growth in the months ahead, and we can see this from the way that foreign portfolio investors have been playing in the market in the last two years and taking advantage of the undervalued prices of major companies.

Source: Punch (written by Udeme Ekwere)