Nigeria’s stock market witnessed a notable decline in foreign investor participation in February 2025, as outflows exceeded inflows by 26.6%, according to recent data from the Nigerian Exchange Group (NGX).
A report analyzing domestic and foreign portfolio transactions at the NGX revealed that foreign investment outflows amounted to N24.60 billion in February, surpassing inflows, which stood at N18.05 billion. This trend signals a weakening foreign presence in the market as global investors reduce their exposure to Nigerian equities.
Decline in Total Foreign Investment
Comparing figures from the previous month, foreign outflows fell by 46.3%, dropping from N45.85 billion in January to N24.60 billion in February 2025. Similarly, inflows declined by 29.7%, from N25.66 billion in January to N18.05 billion in February.
As a result, total foreign investment—including both inflows and outflows—declined significantly by 40.3%, shrinking from N71.51 billion in January to N42.65 billion in February 2025.
The broader market also experienced a slowdown, with total transactions on the NGX declining by 16.07%, dropping from N607.05 billion in January to N509.47 billion in February 2025.
Domestic vs. Foreign Investor Participation
The report indicated that domestic investors dominated the market, accounting for 84% of total transactions, while foreign investors represented only 16%. The total volume of domestic transactions fell by 12.83%, decreasing from N535.64 billion in January to N466.82 billion in February 2025.
Market analysts attribute the reduced investor participation to a growing preference for debt securities, as rising yields in the fixed-income market make bonds more attractive compared to equities.
Retail and Institutional Investment Trends
Further analysis of domestic transactions revealed that retail investments declined by 19.76%, dropping from N267.35 billion in January to N214.51 billion in February 2025. Institutional investments also saw a dip of 5.92%, decreasing from N268.19 billion to N252.31 billion over the same period.
Market Analysts’ Insights
Experts suggest that the increased outflow of foreign investments is a reflection of profit repatriation by investors.
David Adonri, a financial analyst at Highcap Securities Limited, noted that when outflows surpass inflows, it indicates that investors are moving their earnings back to their home countries. He also pointed out that currency fluctuations could be affecting investor confidence, as a volatile exchange rate environment discourages long-term investments.
Similarly, analysts at InvestData Consulting emphasized that rising yields in the fixed-income market have drawn investors away from equities, leading to lower participation in the stock exchange.
Outlook for the Market
While foreign investment outflows remain a concern, market watchers anticipate that stability in exchange rates and favorable economic policies could help restore confidence in Nigeria’s stock market. However, the shift toward fixed-income securities suggests that equities may continue to face challenges in attracting investors in the near term.
