Trading activity on the Nigerian Exchange Limited (NGX) took a sharp downturn in February 2025, with total transactions declining by 16.07% to ₦509.47 billion, down from ₦607.05 billion recorded in January. The decline was largely attributed to a significant withdrawal of foreign investors, further shifting market control to domestic participants.
Foreign Investment Decline Weighs on Market
The latest Domestic and Foreign Portfolio Investment Report from NGX revealed that foreign transactions plummeted by 40.36%, dropping from ₦71.51 billion in January to ₦42.65 billion in February. Within this category:
- Foreign inflows fell 29.67% to ₦18.05 billion from ₦25.66 billion in the previous month.
- Foreign outflows declined 46.33% to ₦24.60 billion, compared to ₦45.85 billion in January.
As a result, foreign investors accounted for only 8.37% of total trading activity in February, down from 11.78% in January.
Domestic Investors Remain Market Leaders
Despite the exit of foreign investors, domestic investors maintained dominance, contributing 91.63% of total transactions. However, their trading activity also declined:
- Total domestic transactions fell 12.83%, from ₦535.54 billion in January to ₦466.82 billion in February.
- Retail investors recorded a 19.76% drop, with transactions falling to ₦214.51 billion from ₦267.35 billion.
- Institutional investors saw a 5.92% decline, trading ₦252.31 billion, compared to ₦268.19 billion in January.
Year-to-Date Performance and Long-Term Trends
For the first two months of 2025, total transactions on the NGX amounted to ₦1.12 trillion, reflecting a 10.62% increase compared to the same period in 2024. However, foreign participation continued to shrink, making up just 10.22% of total trades, down from 11.78% a year earlier.
Over the past 18 years, domestic investor participation in Nigeria’s stock market has risen by 33.15%, reaching ₦4.73 trillion in 2024, while foreign transactions grew by 38.31% to ₦852 billion. Despite this, foreign investor involvement remains relatively low, averaging just 15% of total market activity in 2024.
Investor Confidence and Market Outlook
The continued decline in foreign investment underscores lingering concerns over investor confidence in Nigeria’s capital market. Reports indicate that foreign investors withdrew ₦455.62 billion from the stock market in 2024, outpacing inflows, despite the Central Bank of Nigeria’s efforts to stabilize the naira.
As economic uncertainties persist, market analysts suggest that domestic investors will remain the driving force behind NGX transactions, while policies aimed at improving economic stability could help restore foreign investor confidence in the long run.
