Foreign investors pulled a total of ₦576.09 billion from the Nigerian Exchange (NGX) in the first half of 2025, marking an 84.97% increase from the ₦311.41 billion recorded in the same period last year.
This significant outflow, revealed in the NGX’s June 2025 Domestic and Foreign Portfolio Investment Report, has led to a net negative foreign portfolio position of ₦16.84 billion over six months, despite inflows totalling ₦559.25 billion.
The report shows that total foreign trading activity on the Exchange more than doubled year-on-year, hitting ₦1.14 trillion in H1 2025 compared to ₦540.48 billion in H1 2024. Analysts attributed the spike in outflows to global policy volatility, particularly from U.S. President Donald Trump’s trade stance, as well as high local yields on money market instruments, which prompted profit-taking.
Domestic investors maintained dominance, accounting for ₦3.06 trillion or 72.92% of all transactions in the period, up 41.5% from ₦2.17 trillion in the same period of 2024. Institutional investors contributed ₦1.59 trillion, while retail investors made up ₦1.47 trillion, indicating a relatively balanced participation, though recent data suggests institutional investors are gaining ground.
Market turnover in H1 2025 reached ₦4.19 trillion, representing a 61% increase year-on-year. However, this headline growth masks underlying concerns about the sustainability and composition of capital flows, particularly the persistent dominance of foreign outflows and waning retail participation.
Monthly breakdowns showed considerable volatility. March recorded the highest trading volume (₦1.29 trillion), driven by record foreign inflows of ₦349.97 billion and domestic institutional activity. But momentum faltered in April after the U.S. announced a 14% tariff on Nigerian goods, triggering foreign outflows and a drop in retail activity. By June, a modest recovery in the naira to ₦1,529.71/$1 at the official market slightly improved foreign sentiment, resulting in a net inflow of ₦6.33 billion.
Commenting on the trend, Johnson Chukwu, Group Managing Director of Cowry Assets Management, said much of the foreign capital is concentrated in short-term money market instruments due to their guaranteed returns. “Of the $5.2 billion that came into Nigeria via portfolio investment in Q1 2025, $4.2 billion went into money markets like OMO and treasury bills, while only $117 million entered equities,” he noted.
Chukwu also pointed to concerns that Nigerian equities may be overvalued, given over 40% market gains in less than two years without a corresponding shift in economic fundamentals.
Similarly, Olatunde Amolegbe, Managing Director of Arthur Stevens Asset Management and former President of the Chartered Institute of Stockbrokers, explained that foreign portfolio investors tend to be opportunistic traders. “They come in, take profit, and exit. But this doesn’t mean they won’t return,” he said, adding that inflows into the fixed income market often serve as a precursor to equity investment.
Amolegbe argued that the equities market is still attractive, with the NGX returning about 40% year-to-date, but that fixed income offers more instruments and deeper liquidity.
Research analyst Dayo Adenubi noted that FPIs are typically driven by short-term, data-heavy strategies. “They rely on quantitative models and are under pressure to outperform benchmarks,” he said, adding that many such investors operate through actively managed index funds focused on short-term alpha.
While institutional investors continue to strengthen their hold on the domestic market, concerns persist about declining retail participation. Analysts cite inflation, now above 22%, as a key factor limiting household investment activity.
Despite robust turnover figures, market experts caution that the current investor mix, driven largely by foreign short-term interest and institutional concentration, raises questions about the long-term resilience and inclusivity of Nigeria’s capital market.
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