Foreign Investors Dump ₦576bn in Nigerian Stocks Amid Market Volatility and Policy Uncertainty
Between January and June 2025, foreign investors withdrew ₦576.09 billion from the Nigerian Exchange (NGX), an 85% increase compared to the ₦311.41 billion in the same period of 2024. This marks a net foreign portfolio deficit of ₦16.84 billion, as inflows totalled ₦559.25 billion. The NGX’s June 2025 Domestic and Foreign Portfolio Investment Report reveals heightened foreign trading activity, with total foreign transactions climbing to ₦1.14 trillion—more than double last year’s H1 figure. Economists attribute the surge in outflows to global market uncertainties, especially the trade policies of U.S. President Donald Trump and the appeal of high-yield Nigerian Treasury Bills.
Domestic investors dominated the NGX with ₦3.06 trillion worth of trades in H1 2025, accounting for nearly 73% of all transactions. Of this, institutional investors contributed ₦1.59 trillion, slightly ahead of retail investors at ₦1.47 trillion. While retail and institutional activities were initially balanced, recent months show institutions gaining a strong lead. In June, institutional trades hit ₦364.71 billion, while retail trades dropped to ₦274.63 billion. The disparity signals a shift in market liquidity towards more sophisticated players, with inflation and reduced disposable income causing retail investor participation to wane.
The NGX recorded a total market turnover of ₦4.19 trillion in H1 2025—a 61% year-on-year increase from ₦2.6 trillion. March stood out with ₦1.29 trillion in trades, driven by exceptional foreign inflows of ₦349.97 billion. However, this momentum reversed in April following Trump’s announcement of a 14% tariff on Nigerian imports, triggering a sharp decline in foreign interest. While June showed modest recovery in inflows and continued strong institutional activity, experts warn that the surge in volume conceals fragility in investor confidence and the sustainability of capital inflows.
Despite the naira’s appreciation to ₦1,529.71/$1 in June, ongoing foreign investor outflows highlight persistent concerns over FX repatriation and macroeconomic stability. Experts, including Cowry Assets’ Johnson Chukwu, argue that while fixed-income instruments remain attractive due to high yields, Nigerian equities may now be seen as overvalued, deterring foreign interest. Chukwu points out that the bulk of portfolio investments—$4.2 billion out of $5.2 billion in Q1—went into Treasury Bills and OMO instruments, not equities. Analysts agree that foreign investors may return, but only with greater policy clarity and more favorable valuations.
Financial analysts like Olatunde Amolegbe and Dayo Adenubi view the trends as part of the cyclical nature of foreign portfolio investment (FPI). Amolegbe highlights the role of fixed-income markets as entry points for foreign investors, who may later transition to equities. He notes that while some investors are profit-taking, others may return if equity valuations become more attractive. Adenubi adds that many FPIs rely on short-term, data-driven strategies and actively managed index funds, which amplify market volatility but aid liquidity. Both warn, however, that without stronger macroeconomic fundamentals and inclusive retail participation, Nigeria’s capital market growth could be uneven and unsustainable.
Source: punch