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Foreign investors withdrew a staggering N45.85 billion from the Nigerian stock market in January 2025, significantly overshadowing the N25.66 billion recorded as foreign inflows within the same period. This trend indicates that while some foreign investors may still engage with the Nigerian market, a greater proportion opt to exit, contributing to capital flight.
According to the Nigerian Exchange Domestic and Foreign Portfolio Investment Report, foreign outflows accounted for 64.12 per cent of total foreign transactions on the exchange, reinforcing concerns over declining foreign participation in the market. The report noted, “On a monthly basis, Nigerian Exchange Limited polls trading figures from market operators on their Domestic and Foreign Portfolio Investment flows.”
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The report further revealed that total foreign transactions increased by 7.13 per cent, rising from N66.75 billion in December 2024 to N71.51 billion in January 2025. However, this increase was largely driven by investors liquidating their holdings, as evidenced by the much larger outflow compared to inflows.
The withdrawal of foreign funds from the market came amid a 9.89 per cent decline in total equity transactions on the NGX, which fell from N673.66 billion in December 2024 to N607.05 billion in January 2025. On a year-on-year basis, total transactions dropped by 6.83 per cent from N651.52 billion recorded in January 2024.
The report stated, “As at 31 January 2025, total transactions at the nation’s bourse decreased by 9.89 per cent from N673.66 billion (about $438.64 million) in December 2024 to N607.05 billion (about $410.84 million) in January 2025.”
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Foreign investors’ share of total market transactions stood at 11.78 per cent, with domestic investors dominating with 88.22 per cent. This represents a slight increase from 9.91 per cent foreign participation in December 2024 but remains far below historical averages when foreign investors played a more substantial role in market liquidity and depth.
A closer look at domestic transactions revealed a notable shift in investor behaviour. Institutional investors, who traditionally drive market stability, significantly reduced their participation, with transactions falling by 33.95 per cent from N406.04 billion in December 2024 to N268.19 billion in January 2025.
In contrast, retail investors showed increased enthusiasm, possibly seeking bargain opportunities in a market where valuations may appear attractive. Retail transactions rose by 33.10 per cent from N200.87 billion to N267.35 billion within the same period.
Despite concerns over foreign outflows, the exchange rate showed signs of stability, with the naira appreciating from N1,535.81/$ in December 2024 to N1,478.22/$ in January 2025. However, this stability was not sufficient to reverse foreign investor sentiment, as broader macroeconomic challenges persist.
The NGX report also provided a broader historical context, showing that over an 18-year period, domestic transactions increased by 33.15 per cent from N3.556 trillion in 2007 to N4.735 trillion in 2024, while foreign transactions grew by 38.31 per cent, from N616 billion to N852 billion over the same period.
However, foreign participation has steadily declined in recent years, with foreign investors accounting for only 15 per cent of total transactions in 2024, while domestic investors controlled 85 per cent of the market. There is a need for foreign investors to increase their stake in Nigerian equities and for more stable macroeconomic policies, improved market transparency, and strengthened investor confidence.
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