Foreign investors are increasingly withdrawing from the Nigerian Exchange (NGX), with year-to-date foreign outflows reaching N400.04 billion by October 2024, surpassing inflows of N344.30 billion. This marks a net withdrawal of N55.74 billion. Data from the exchange indicates that foreign transactions represented just 16.65% of total market activity, valued at N4.47 trillion in the first ten months of the year, with domestic transactions making up the remaining 83.35%. October saw a 14.61% increase in foreign transactions compared to September, but foreign participation remained low at 9.44% of the total market activity.
The ongoing depreciation of the naira, which weakened by 2.31% to N1690.37/$, has further eroded foreign investor confidence. Domestic investors have largely sustained the market, contributing N3.73 trillion year-to-date, with both retail and institutional investors playing significant roles. Despite improvements in foreign transactions from N291.38 billion in 2023 to N744.34 billion in 2024, foreign participation is still overshadowed by domestic trading.
Experts, including David Adonri of Highcap Securities, suggest that the foreign outflows are a result of investors repatriating profits due to currency volatility. While the absence of foreign investors may reduce foreign currency supply, it is unlikely to destabilize the economy as long as domestic participation remains robust. However, the shift in foreign interest raises concerns about the NGX’s ability to attract sustained foreign capital.
