Foreign Investors Dump ₦576 Billion Worth of Nigerian Stocks in First Half of 2025

Nigeria’s stock market is facing a wave of foreign investor exits, as the Nigerian Exchange (NGX) recorded an outflow of over ₦576 billion between January and June 2025. This sharp sell-off represents an increase of nearly 85 percent compared to the ₦311 billion pulled out in the same period last year, raising serious concerns about the stability of foreign investment in the country’s capital market.

The sell-off has also created a net negative position for Nigeria’s foreign portfolio investment (FPI), with outflows outpacing inflows. While ₦559.25 billion flowed into the Nigerian market during the first half of the year, the outflows surpassed this figure by ₦16.84 billion. These statistics were detailed in the NGX’s Domestic and Foreign Portfolio Investment Report for June 2025.

Overall, foreign trading activity has intensified significantly, with total transactions by foreign investors reaching ₦1.14 trillion in the first six months of the year. This is more than double the ₦540.48 billion recorded in the same period of 2024. Analysts attribute this surge in foreign investor activity — particularly outflows — to several factors, including shifting global economic conditions, the allure of high yields from Nigerian Treasury bills, and uncertainty sparked by US President Donald Trump’s foreign trade policies.

Despite the strong volume of foreign activity, domestic investors remained the dominant force in Nigeria’s capital market, accounting for over ₦3.06 trillion worth of trades, or nearly 73 percent of all transactions in the first half of 2025. This marked a 41.5 percent jump from the ₦2.17 trillion recorded in the same period of the previous year.

Interestingly, the split between domestic retail and institutional investors was fairly balanced. Institutional investors made trades worth ₦1.59 trillion, while retail investors handled ₦1.47 trillion. However, recent trends suggest that institutional players are gradually taking the lead, with a noticeable shift beginning from March.

Total transactions on the NGX for the first six months of the year hit ₦4.19 trillion — a notable 61 percent increase compared to the ₦2.6 trillion recorded in H1 2024. While this rise in trading volume might seem like a positive development, experts warn that the growing dominance of institutional investors and the continued retreat of foreign participants may point to a lack of market diversity and growing vulnerability.

A closer look at monthly trading data reveals how volatile investor behavior has been this year. In January 2025, total trading stood at ₦346 billion, with domestic investors accounting for ₦269 billion and foreign investors contributing ₦77 billion. Retail and institutional investors were nearly equal in activity, with ₦134 billion and ₦135 billion respectively.

February saw a bump in activity to ₦448 billion. Foreign inflows were relatively modest at ₦43.7 billion, with outflows slightly higher at ₦47.9 billion, signaling a small net negative. While institutional investors increased their trading volume to ₦170 billion, retail participation dipped to ₦123 billion.

March saw a massive spike in overall trading activity. Transactions soared to ₦1.29 trillion, driven by a sudden inflow of foreign capital totaling ₦350 billion. Outflows for the same month were ₦205 billion, leaving a net gain of ₦144 billion. Domestic institutional trading also saw a boost, reaching ₦274 billion, while retail activity rose to ₦213 billion.

However, the momentum did not last. April brought a significant drop in total trades to ₦487 billion. Foreign inflows fell to ₦26 billion, while outflows climbed to ₦70 billion. The domestic side also slowed down, with retail trading at ₦174 billion and institutional at ₦181 billion. This market cool-down coincided with President Trump’s announcement of a 14 percent tariff on Nigerian exports, which rattled investor confidence.

In May, foreign outflows remained high at ₦61 billion, while inflows remained weak at just ₦24 billion. Despite this, institutional investors seemed undeterred, increasing their trades to ₦244 billion. Retail trades also rose slightly to ₦337 billion, contributing to total transactions of ₦700 billion.

June brought another strong month for the NGX, with total trades reaching ₦779 billion, the second-highest of the year. Foreign inflows recovered to ₦72.8 billion, while outflows eased slightly to ₦66.5 billion, resulting in a net positive position of ₦6.3 billion. Institutional investors significantly ramped up their trades, accounting for ₦365 billion — a 49 percent increase from May. On the other hand, retail participation fell sharply to ₦275 billion, a decline of nearly 19 percent.

Market observers say these fluctuations reflect growing sensitivity among foreign investors toward Nigeria’s economic policies and exchange rate stability. While the naira appreciated slightly in June to ₦1,529 per US dollar, up from ₦1,586 in May, concerns about foreign exchange repatriation and overall macroeconomic stability still loom large.

Institutional investors have clearly widened their lead over retail investors in recent months. From a near-even split earlier in the year, institutions now hold a larger share of the market. This shift may be due to ongoing inflation, which continues to erode household income and reduce the capacity of average Nigerians to invest.

With inflation hovering above 22 percent, many Nigerians are prioritizing basic needs over savings or investment. In contrast, institutional players such as pension funds and asset managers are adjusting their portfolios to protect and grow assets amid rising inflation and uncertain returns in other sectors.

Despite the growth in market turnover, the ongoing dominance of institutional players and the retreat of retail investors raise concerns about long-term market health. Experts also warn that continued foreign investor hesitation could limit future growth prospects.

Financial analyst Johnson Chukwu explained that most foreign investors remain active but cautious. While many of them are currently focused on fixed-income securities like Treasury bills and OMO instruments due to attractive yields, they are reluctant to commit heavily to Nigerian equities. Chukwu noted that many see local equities as overvalued, especially given the strong market gains over the past year without corresponding improvements in the broader economy.

Olatunde Amolegbe, Managing Director of Arthur Stevens Asset Management and a former president of the Chartered Institute of Stockbrokers, echoed this sentiment. He explained that foreign portfolio investors are typically profit-seekers. Once they hit their investment targets, they exit the market — not necessarily because of a lack of confidence, but because of a shift in strategy.

According to Amolegbe, many foreign investors enter Nigeria through fixed-income instruments, which offer a safer initial investment. Over time, some transition to equities once they are comfortable with the market. However, the limited number of equities and a smaller market size compared to fixed-income options often restrict large equity investments.

Research analyst Dayo Adenubi added that foreign portfolio investors operate on highly data-driven models, with a strong focus on short-term gains. Their strategies emphasize quick results, liquidity, and risk management, which explains their cautious behavior in volatile environments like Nigeria’s.

Ultimately, while the Nigerian Exchange has witnessed increased trading activity in 2025, the investor mix and outflow trends highlight a more complex story. The market remains active, but underlying concerns — from inflation to foreign policy and economic uncertainty — continue to shape investor behavior.