Between January and June 2025, foreign investors sold out N576.09 billion worth of stocks on the Nigerian Exchange, an increase of 84.97% over the N311.41 billion that was taken out during the same time period in 2024.
Over the course of the six months, the net negative foreign portfolio position was N16.84 billion since the outflows were more than the foreign inflows, which totaled N559.25 billion. Foreign trading activity has increased in comparison to the same period last year, according to data from the NGX’s June 2025 Domestic and Foreign Portfolio Investment Report.
In the first half of 2024, total foreign transactions reached N1.14 trillion, more than twice the N540.48 billion recorded in H1 2024. Economists attributed the spike in outflows to a number of factors, including the high yields on T-bills that prompted sell-offs and the inconsistencies caused in global markets by US President Donald Trump‘s policies.
In the meantime, N3.06 trillion in trades, or 72.92 percent of all market transactions, were made by domestic investors between January and June 2025. Compared to N2.17 trillion at the same time period in 2024, this is a 41.5% increase. Retail investors traded N1.47 trillion, while institutional investors contributed N1.59 trillion of the overall domestic number.
Although recent months have seen institutions take the lead, the near-parity between retail and institutional activity indicates balanced domestic participation over the half-year. The overall value of transactions on the Exchange throughout the six-month period was N4.19 trillion, which was 60.98 percent more than the N2.60 trillion recorded in H1 2024.
Despite having a positive volume, this increase conceals mounting worries about the quality of capital flows, especially the rise in outflows from overseas and the fall in retail activity. An analysis of monthly data shows that investor behavior is erratic, with significant swings in both domestic and international trades.
Transactions totaled N346.23 billion in January 2025, with N76.84 billion coming from outside and N269.39 billion coming from domestic sources. At N134.17 billion and N135.22 billion, respectively, retail and institutional domestic trades were split nearly evenly. Activity increased to N448.52 billion by February. Foreign inflows were N43.67bn, and outflows were N47.93bn, reflecting modest net negative flows. Retail participation dropped to N123.38bn, while institutional trades rose to N170.54bn, indicating a gradual institutional build-up.
For H1 2025, March was the busiest month. Due to an extraordinary increase in foreign inflows of N349.97 billion, which exceeded the sum of all previous months, overall transactions jumped to N1.29 trillion. There was a net gain of N144.43 billion after outflows of N205.54 billion. Retail transactions totaled N212.77 billion, while institutional domestic investors’ exposure rose to N273.74 billion.
But this trend was reversed in April. Trades dropped precipitously to N487.39 billion. While outflows increased to N70.20 billion, foreign inflows decreased at N26.47 billion. Institutional investors slowed to N180.62 billion, while retail trades dropped to N174.10 billion. The reversal coincided with US President Donald Trump’s declaration of a 14% tariff on Nigeria.
Foreign inflows were modest at N24.12 billion in May, while outflows stayed high at N60.94 billion. Retail investors saw a slight increase to N337.46 billion, while institutional investors traded N244.13 billion, up from April’s amount. The total value of trades in May was N700.50 billion. Data from June indicated that trade activity was high once again. With N778.65 billion in total trading, it was the second-highest amount since March. While outflows somewhat decreased to N66.49 billion, foreign inflows bounced back at N72.82 billion.
The net positive foreign position at the end of the month was N6.33 billion. Institutional investors contributed N364.71 billion, up 49.39% from May, while retail transactions decreased 18.62% to N274.63 billion. An underlying sensitivity to foreign exchange liquidity and policy clarity is indicated by the foreign investment pattern over the course of the six months.
The naira’s appreciation to N1,529.71/$1 at NAFEM in June from N1,586.15/$1 in May may have supported a modest recovery in inflows. However, the continued dominance of outflows reflects lingering concerns over FX repatriation and macroeconomic policy stability.
It was observed that institutional investors have gradually widened their lead over retail participants in recent months. While both groups were nearly even in January and February, institutional trades began to outpace retail trades from March onwards.
The gap became more visible in June, with institutional trades at N364.71bn, compared to retail’s N274.63bn. Retail participation peaked in May at N337.46bn before declining in June. This may be due to inflationary pressures, which continue to erode real wages and reduce the disposable income available for investment.
Even though market turnover increased by 61% year over year, the investor mix raises significant concerns about the sustainability of market growth, as evidenced by the steady outflows of foreign investors. The strengthening of institutional activity, on the other hand, reflects portfolio rebalancing by pension funds and asset managers seeking higher returns amid rising inflation and tepid fixed-income yields. With inflation hovering above 22%, more households are spending on necessities rather than saving or investing.
Retail investors, who are essential to market depth and durability, seem to be retreating as a result of economic pressures, while institutional investors’ steady rise indicates a concentration of market liquidity among a small number of participants.
EXPERT SPEAKS
“We have to acknowledge that there have been inconsistencies in Mr. Trump’s trade policies, but regardless, foreign portfolio investors are still very active in the Nigerian financial market,” said financial analyst Johnson Chukwu in response to the news. The largest portion of the overall portfolio capital importation was made up of foreign portfolio investments, as you can see if you look at the Q1 2025 capital importation report that was released on Tuesday.
If you look at that report, you’ll see that foreign portfolio investment made up roughly $5.20 billion of the $5.64 billion that entered the economy as a whole. The funds are being invested in treasury bills, fixed income instruments, and OMO instruments due to the yields on
If you look at that report, you’ll see that foreign portfolio investment made up roughly $5.20 billion of the $5.64 billion that entered the economy as a whole. The money is going into fixed income instruments, going into treasury bills, going into OMO instruments, because the returns on those instruments are guaranteed.
“Treasury notes were offering rates of roughly 23–24% at one point, which was very alluring to international portfolio investors, until the central bank started lowering the yield on these instruments last month (OMO was still offering a yield of roughly 23%). Therefore, it was an attractive tool for them to invest in money market products because, when you look at it, $4.2 billion of the $5.2 billion that went into the portfolio was invested in money market securities. The $4.2 billion money market was made up of Treasury notes and OMO investments. Upon closer inspection, equity was a mere $117 million.
“Some of them may be perceiving that our equity instruments are already overpriced, overvalued, because if you consider the market gain of last year and this year, we’ve gotten a gain of more than 40 percent, and the fundamentals of the economy have not materially changed,” Chukwu, the Group Managing Director of Cowry Assets Management Limited, continued about foreign investors’ lack of interest in Nigerian stocks. Therefore, foreign investors in our portfolios might believe that our stock instruments are already expensive.
Olatunde Amolegbe, the managing director and chief executive officer of Arthur Stevens Asset Management Limited, stated that the majority of foreign investors in portfolios were traders. Additionally, they are adopting a stance with the intention of turning a profit. Therefore, like any other investor, they will usually sell off if they take a position and believe it has generated a profit. This does not imply that they will not return. Therefore, I believe that the amount of money that was spent, in comparison to the previous year, is the other side of the equation.
You’ll notice that, overall, what has entered has most likely remained. One side of the equation is not enough when it comes to overseas portfolio investments. Money must first come in before it can go. What has occurred is merely a natural trend: money enters the system and exits if the investment goal has been met. That does not preclude its reintroduction.
With the NGX returning almost 40% year to date, Amolegbe, a former president of the Chartered Institute of Stockbrokers, asserted that the equity market was outperforming the fixed income market.
He continued by saying that as fixed-income products act as a conduit to the equity market, the strong demand for them should be anticipated.
The fixed income market is typically used as a gateway for foreign portfolio investments entering the nation. They will then begin transferring funds to stocks. As I previously mentioned to someone, Ghana usually receives the majority of foreign direct investment when it comes to Africa, or specifically West Africa. They will assert that Ghana serves as the entry point to West Africa. Nigeria, however, is the final destination on the other side of that equation.
The same is true for foreign investors in stocks; they usually start with fixed income since it is safer, but eventually they will switch to stocks. Why? due to the fact that stock usually yields a higher return than fixed income. Naturally, you must also acknowledge that, in terms of the instruments they may access, the fixed income market usually has a higher volume than the equity market.
Therefore, if they are making a lot of money, they can purchase more assets or instruments in the fixed income market than in the equity market. When comparing the market capitalization of the fixed income and equity markets, the former is nearly three or four times the latter. Therefore, when fixed income funds arrive, they usually find more uses in the fixed income market than in the stock market, according to Amolegbe.
Dayo Adenubi, a research analyst, discussed the development and clarified that short-term plans and data-heavy models are frequently what motivate international portfolio investors. It’s investing in a foreign portfolio. “They have short-term goals,” Adenubi
They employ sophisticated models and take a very quantitative approach. It facilitates improved market price discovery and liquidity.
According to Adenubi, a large number of FPIs in Nigeria operate through actively managed index funds, which are constantly under pressure to beat benchmarks and provide investors with substantial returns. Since those funds provide yearly reports to their clients and investors, their primary goal is to rapidly increase the total assets under management. Therefore, they are short-termists for pursuing such alpha,” he continued.
remarked.
