Foreign investments in the Nigerian Exchange Limited (NGX) hit a record low of ₦11.26 billion in September 2024, marking the weakest inflow of the year, according to the NGX’s latest Domestic & Foreign Portfolio Investment Report. The report highlights increasing divestments by foreign investors, with liquidations rising from ₦24.38 billion in August to ₦30.15 billion in September.
Despite this recent drop, total foreign inflows for the first nine months of 2024 reached ₦310.99 billion, a significant increase compared to ₦108.93 billion during the same period in 2023. The peak inflow of ₦54.87 billion was recorded in May, but figures have steadily declined since.
Analysts attribute the declining foreign participation to the unstable naira and high interest rate environment, which have driven investors to seek better returns outside the equity market. The naira recently closed at ₦1,652.25/$ in the Nigerian Autonomous Foreign Exchange Market, and the Central Bank of Nigeria (CBN) has maintained an aggressive stance on inflation by setting the benchmark interest rate at 27.25%. Inflation hit 33.88% in October, fueling expectations of further rate hikes.
Meanwhile, domestic activity in the NGX has seen notable growth. Total transactions at the bourse rose by 29.9% from ₦379.52 billion in August to ₦493.01 billion in September, a 66.67% increase compared to September 2023. Domestic investors dominated trading, accounting for 84% of total transactions in September, with retail investors outperforming institutional investors by 28%.
Despite the rise in domestic activity, total foreign transactions declined by 27.95% month-on-month, from ₦57.47 billion in August to ₦41.41 billion in September. The disparity between domestic and foreign participation underscores the challenges faced by Nigeria’s equity market in attracting and retaining foreign investors.
