LAGOS, August 7, 2025 — Foreign investors pulled a staggering ₦576.09 billion out of the Nigerian stock market in the first half of 2025, marking an 85% jump from the ₦311.41 billion withdrawn during the same period in 2024, according to data from the Nigerian Exchange (NGX).
Despite a marginal ₦559.25 billion in fresh foreign inflows, the net foreign portfolio investment (FPI) position for the period ended negative at ₦16.84 billion. This indicates growing foreign investor wariness, even as overall foreign activity surged to ₦1.14 trillion — more than double the ₦540.48 billion recorded in H1 2024.
Analysts say the uptick in capital flight was triggered by global uncertainty, notably U.S. President Donald Trump’s erratic trade policies and rising yields on Nigerian T-bills, which prompted investors to switch from equities to fixed income.
Domestic Players Dominate, But Institutional Muscle Grows
Nigerian investors remained the dominant force in the market, accounting for ₦3.06 trillion worth of trades — 72.9% of total activity. This is up from ₦2.17 trillion in H1 2024. Domestic institutional investors contributed ₦1.59 trillion, while retail investors added ₦1.47 trillion, suggesting a relatively balanced local presence.
However, a closer look reveals a recent tilt in favor of institutions. While the year began with nearly equal trading volumes between retail and institutional investors, institutions have since taken the lead, especially by June.
In total, NGX’s transaction volume for the half-year reached ₦4.19 trillion, representing a 61% year-on-year increase.
Monthly Trading Snapshot: A Volatile Landscape
January: ₦346.23bn total trades (₦269.39bn domestic, ₦76.84bn foreign)
February: ₦448.52bn total trades; foreign outflows (₦47.93bn) exceeded inflows (₦43.67bn)
March: Activity peaked at ₦1.29tn, with an inflow spike to ₦349.97bn and outflows at ₦205.54bn
April: Market slowed down to ₦487.39bn following Trump’s announcement of a 14% tariff on Nigeria
May: Total trades reached ₦700.50bn; foreign outflows remained high at ₦60.94bn
June: Second-highest volume at ₦778.65bn, foreign inflows rebounded to ₦72.82bn
In June, institutional investors led domestic trades at ₦364.71bn — a 49% jump from May — while retail activity declined to ₦274.63bn, signaling inflation’s growing squeeze on household investment capacity.
What’s Behind the Foreign Exodus?
Experts say foreign portfolio investors are responding to a mix of short-term triggers:
Currency Risks: The naira appreciated slightly to ₦1,529.71/$ in June, offering some hope, but FX repatriation concerns persist.
Policy Jitters: Investors remain wary of Nigeria’s macroeconomic direction and lack of clear fiscal signals.
Attractive Fixed Income Yields: With Treasury bills and OMO instruments offering returns of 23–24% earlier this year, many investors opted for safer, income-generating assets instead of equities.
Analysts Weigh In
Johnson Chukwu, CEO of Cowry Assets Management, noted that most foreign capital inflow in Q1 2025 was directed toward fixed-income securities rather than equities. Of the $5.64 billion in total capital importation, $5.2 billion came from FPIs — and $4.2 billion of that was allocated to money market instruments.
He added that equities may appear overpriced to foreign investors, given the 40%+ market gains over the past year despite stagnant economic fundamentals.
Olatunde Amolegbe, CEO of Arthur Stevens Asset Management, emphasized that foreign portfolio investors are typically profit-driven traders. “They’ll exit once they hit their targets — but that doesn’t mean they won’t return,” he said, adding that fixed income often serves as the gateway for foreign entry before money flows into equities.
Dayo Adenubi, a market analyst, stressed the short-term nature of FPI strategies. “These investors use data-driven models and prioritize returns, often managing index funds under intense pressure to beat benchmarks,” he explained.
The Big Picture
While the Nigerian market has seen a surge in trading volume, the sustainability of this growth is under scrutiny. Foreign capital remains volatile and cautious, while domestic participation is increasingly skewed toward large institutions. Retail investors — vital for market depth — are being sidelined by inflation and economic uncertainty.
As inflation stays above 22%, household budgets are tightening, making retail investment more difficult. Meanwhile, pension funds and asset managers continue to rebalance toward equities, seeking better yields amid weak returns in traditional fixed-income channels.
