Foreign investors sold Nigerian equities worth ₦576.09 billion between January and June 2025, marking an 85% year-on-year increase compared to ₦311.41 billion in the same period of 2024. The data, published in the June 2025 Domestic and Foreign Portfolio Investment Report by the Nigerian Exchange Limited (NGX), signals rising investor caution amid global and local economic shifts.
Despite an uptick in foreign inflows—₦559.25 billion in H1 2025—outflows outpaced them, leaving a net negative foreign portfolio balance of ₦16.84 billion for the six-month period.
Rising Activity, Sharper Outflows
Total foreign trading volume more than doubled year-on-year, reaching ₦1.14 trillion, up from ₦540.48 billion in H1 2024. Analysts attribute this surge to multiple factors:
Global market volatility driven by U.S. President Donald Trump’s trade policies
Attractive T-bill yields which encouraged foreign capital movement into fixed-income markets
Ongoing concerns over FX repatriation and policy clarity in Nigeria
Domestic Investors Dominate Market Volume
Domestic investors accounted for ₦3.06 trillion in trades during H1 2025—72.9% of total market activity—marking a 41.5% increase from ₦2.17 trillion in H1 2024.
Institutional investors led domestic activity with ₦1.59 trillion
Retail investors contributed ₦1.47 trillion
Total market transactions for H1 2025 stood at ₦4.19 trillion, up 61% year-on-year
While institutional and retail participation were nearly equal at the start of the year, institutional investors began to pull ahead from March, widening the gap by June.
Month-by-Month Breakdown Highlights Volatility
January: ₦346.23bn total trades; evenly split between retail and institutional investors.
February: Increased activity to ₦448.52bn; institutional trades begin rising.
March: Highest activity month at ₦1.29tn, with ₦349.97bn in foreign inflows and ₦205.54bn in outflows.
April: Sharp drop to ₦487.39bn following Trump’s 14% tariff announcement targeting Nigeria.
May: Total trades rose to ₦700.50bn; foreign outflows stayed high at ₦60.94bn.
June: ₦778.65bn in trades; foreign inflows recovered slightly to ₦72.82bn, with outflows at ₦66.49bn, yielding a net positive of ₦6.33bn.
FX Movements and Investor Sentiment
A marginal naira appreciation in June (₦1,529.71/$1 at NAFEM, up from ₦1,586.15/$1 in May) helped stabilize inflows. However, concerns remain about:
Currency repatriation
Inflation above 22%
Policy direction under current economic leadership
Retail investor activity dropped in June, reflecting eroded purchasing power amid inflation and economic strain, while institutional trades surged by nearly 49% month-on-month.
Analysts’ Insights: Liquidity, Strategy, and Market Outlook
Johnson Chukwu, CEO of Cowry Asset Management, noted the bulk of foreign portfolio investment went into fixed-income instruments like OMO and T-bills, which previously yielded as high as 23–24%.
“Out of $5.64bn in capital importation in Q1 2025, $5.2bn was FPI. Of that, $4.2bn went into money market instruments. Equity received just $117m,” he said.
He added that some investors may now view Nigerian equities as overvalued, given over 40% market gains in the past year with no significant macroeconomic improvement.
Olatunde Amolegbe, CEO of Arthur Stevens Asset Management and former CIS President, echoed that foreign investors are opportunistic traders:
“They come in for returns. Once they meet their targets, they exit. It’s a natural investment cycle, not necessarily a sign of capital flight.”
Amolegbe stressed that foreign capital typically enters through fixed income before rotating into equities, due to the larger market size and safer returns of bonds.
“Fixed income acts as the gateway. Equities come next—only after market conditions prove favorable,” he said.
Dayo Adenubi, a research analyst, pointed out that most FPIs are short-term, data-driven investors operating through actively managed index funds:
“They rely on quantitative models and aim to outperform benchmarks. Their behavior isn’t emotional—it’s purely strategic,” he said.
What It All Means
Despite a 61% surge in total market turnover, the quality of capital flows remains a concern. While institutional investors are becoming dominant players, retail investors are pulling back, potentially weakening long-term market resilience.
The continued net outflows from foreign portfolios suggest that global investors remain wary of Nigeria’s FX environment, macroeconomic stability, and regulatory clarity.
Key Takeaways:
Foreign investors sold ₦576bn in Nigerian stocks in H1 2025
Outflows exceeded inflows, creating a ₦16.84bn net negative
Domestic trades dominated at ₦3.06tn—led by institutions
Foreign capital prefers fixed income over equities
Analysts caution on long-term sustainability amid macroeconomic headwinds
