Foreign investors have divested a staggering N576.09 billion worth of equities on the Nigerian Exchange (NGX) between January and June 2025, marking an 84.97% increase compared to N311.41 billion sold during the same period in 2024.
Data from the NGX’s June 2025 Domestic and Foreign Portfolio Investment Report revealed that foreign outflows exceeded inflows of N559.25 billion, leaving the country with a net negative foreign portfolio balance of N16.84 billion.
This sharp increase in trading activity reflects growing volatility, as total foreign transactions surged to N1.14 trillion in H1 2025—more than double the N540.48 billion recorded during the same period last year.
Economic analysts attribute the surge in outflows to a mix of global uncertainty, including trade policy shifts under U.S. President Donald Trump and the allure of higher yields in Nigeria’s treasury instruments.
Domestic trading remained strong, with Nigerian investors accounting for N3.06 trillion in transactions, up 41.5% from N2.17 trillion in H1 2024.
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Institutional players contributed N1.59 trillion, while retail investors traded N1.47 trillion, indicating near-equal participation though institutions gained dominance in recent months.
Despite a total market turnover of N4.19 trillion in the first six months—a 60.98% increase from H1 2024—concerns persist over the sustainability of capital flows, especially amid declining retail involvement and continued foreign divestments.
Monthly breakdowns from the report highlighted fluctuations in investor behaviour:
- January 2025: N346.23bn in total trades (N269.39bn domestic, N76.84bn foreign). Retail vs. institutional participation was nearly equal.
- February: Trading rose to N448.52bn. Foreign inflows were N43.67bn and outflows at N47.93bn. Institutional activity increased.
- March: The most active month with N1.29tn in total trades. Foreign inflows spiked to N349.97bn while outflows were N205.54bn, creating a net gain of N144.43bn.
- April: Activity declined to N487.39bn, with a significant drop in foreign inflows (N26.47bn) and increased outflows (N70.20bn), coinciding with Trump’s 14% tariff announcement on Nigeria.
- May: Outflows remained high at N60.94bn, while inflows dipped to N24.12bn.
- June: Second-highest month at N778.65bn. Foreign inflows rebounded to N72.82bn, outflows fell to N66.49bn, resulting in a net positive flow of N6.33bn.
The Nigerian naira also appreciated in June, strengthening to ₦1,529.71/$1 at NAFEM from ₦1,586.15/$1 in May, potentially aiding foreign investor confidence.
Nonetheless, persistent concerns over foreign exchange repatriation and macroeconomic uncertainty continue to drive caution among investors.
Recently in an interview with Punch, Group Managing Director of Cowry Assets Management Limited, Johnson Chukwu, explained that while inconsistencies in U.S. policies have had ripple effects, Nigerian fixed-income instruments remain attractive.
Citing Nigeria’s Q1 capital importation report, Chukwu noted that foreign portfolio investment (FPI) accounted for $5.20bn out of the $5.64bn total, with over $4.2bn directed towards treasury bills and OMO instruments.
He also warned that Nigerian equities might be seen as overvalued by foreign investors due to rapid price gains without corresponding economic growth.
The CEO of Arthur Stevens Asset Management and former president of the Chartered Institute of Stockbrokers, Olatunde Amolegbe, also echoed that foreign investors behave like short-term traders—buying in for quick returns and exiting once targets are met.
He emphasized that most FPIs typically enter Nigeria via fixed-income instruments before moving into equities due to the relatively safer and larger volume of opportunities in that segment.
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Speaking as well, research analyst, Dayo Adenubi also stressed that most foreign portfolio investments are driven by short-term, data-heavy strategies.
He explained that many investors operate through actively managed index funds that prioritize quarterly or annual performance metrics, making them highly responsive to global market signals.
Despite a strong performance in turnover, the data suggests increasing concentration of trading activity among institutional players, with retail investors pulling back—likely due to inflation hovering above
Image Credit: Punch Newspappers
