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Foreign inflow to Nigeria’s equities market declined by 29.66% in February 2025, falling to N18.05bn from N25.66bn recorded in January. This decrease, combined with a drop in foreign outflow, resulted in a 40.36% decline in total foreign portfolio transactions on the Nigerian Exchange Limited (NGX), which dropped from N71.51bn to N42.65bn within the month.

According to analysts, the decline signals a weakening interest from offshore investors in Nigeria’s capital market, likely driven by macroeconomic uncertainties and continued volatility in the foreign exchange market.

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Foreign outflows also reduced sharply, falling by 46.33% to N24.60bn in February from N45.85bn in January, suggesting fewer exits but also a cautious stance from investors.

Total transactions on the NGX dropped by 16.07% month-on-month, from N607.05bn (about $410.84m) in January to N509.47bn (about $341.36m) in February. However, trading volumes were stronger year-on-year, with February 2025 activity rising by 42.36% compared to the N357.88bn recorded in February 2024

Domestic investors continued to dominate market activity, accounting for 91.63% (N466.82bn) of total equity transactions in February, while foreign investors contributed only 8.37% (N42.65bn).

Charles Sanni, Chief Executive Officer of Cowry Treasurers Limited, stated, “Inflation created a blurry future for foreign investors. The expectation was that Nigeria would make money, but because of the volatility of the naira, it wasn’t stable, so they had to decide whether to continue investing.

Sanni expressed optimism about potential improvements in the coming months but highlighted concerns over high domestic interest rates and their impact on corporate margins. “If domestic interest rates remain high, the cost of funds for companies will rise, and their margins will thin out over time.”

He warned that the situation reflects a lack of confidence in the economy, which could eventually lead to investor fatigue. “The government needs to manage inflation, stabilise the naira at around N1,200 per dollar, and ensure no crisis in Rivers State. There should also be more transparency in financial reporting,” Sanni advised

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