Onome Amuge
Foreign investors sharply increased their withdrawal from the Nigerian equities market in the first quarter of 2025, pulling out N420.37 billion, representing a 251 per cent increase compared to the N119.81bn outflow recorded in the same period last year, data from the Nigerian Exchange (NGX) reveals.
The spike in capital flight coincides with Nigeria’s implementation of economic reforms, particularly within its foreign exchange market, fueling heightened uncertainty among international investors. Coupled with prevailing global macroeconomic headwinds, the equities market experienced volatile trading patterns, notably in March.
Block trades drive March increase in foreign activity
The NGX Domestic and Foreign Portfolio Investment Report for March 2025 indicates an increase in total foreign transactions to N699.89 billion, a 1,541 per cent jump from February’s N42.65bn and a substantial increase from January’s N71.51 billion. This upswing was largely attributed to block trades consisting of large-volume, privately negotiated transactions typically executed by foreign institutional investors.
Foreign investors dominated trading activity in March, accounting for 62.74 per cent of the total ₦1.115tn trade value, a stark contrast to their 8.37% share in February and 11.78% in January.
Within March’s foreign activity, inflows reached N349.97 billion, closely matched by outflows of N349.92 billion, suggesting a near one-to-one capital rotation. This liquidity-driven round-trip points towards short-term positioning rather than sustained, long-term portfolio commitment.
In contrast, foreign inflows and outflows in February were considerably lower at N18.05 billion and N24.60 billion, respectively, with January registering even more subdued figures of N25.66bn inflow and N45.85bn outflow.
Q1 sees triple-digit growth in both inflows and outflows
For the first quarter of 2025, total foreign outflows soared by 251 per cent year-on-year to N420.37 billion, more than tripling the N119.81 billion recorded in Q1 2024. Foreign inflows also witnessed a 322 per cent increase, climbing from N93.37 billion in Q1 2024 to N393.68 billion in Q1 2025.
Despite the increase in inflows, the quarter concluded with a net capital deficit of N26.69 billion, underscoring persistent investor caution regarding long-term exposure to Nigerian equities. Total foreign transactions for Q1 2025 amounted to N814.05 billion, a 282 per cent jump from the N213.18bn recorded in the corresponding period last year.
Domestic investors retreat in March despite market rally
While foreign interest rose in March, domestic participation witnessed a decline. Total domestic transactions fell by 10.98 per cent to N415.62 billion in March, down from N466.82 billion in February. This marked a reversal from January’s strong showing of N535.54 billion.
A breakdown of the March domestic figures reveals that retail investors traded N197.12 billion, an 8.11 per cent decrease from February’s N214.51 billion, while institutional investors contributed N218.50 billion, a 13.40 per cent decline from February’s N252.31 billion.
Year-to-date, domestic trades reached N1.41798tn compared to the N1.33476 trillion recorded in Q1 2024. Domestic participation accounted for 63.53 per cent of the market, a decrease from the 86.23 per cent share in Q1 2024.
March trade volume surpasses N1trn mark
Fueled by the surge in foreign block trades, March 2025 became the first month this year to exceed N1 trillion in total transactions, reaching N1.115 trillion. This more than doubled February’s N509.47 billion and outpaced January’s N607.05 billion, representing a 118.95 per cent month-on-month increase. Compared to March 2024’s N538.54 billion, the March 2025 figure represents a 107.14 per cent year-on-year rise.
In dollar terms, using the March NAFEM rate of N1,536.82/$1, the March trade volume equates to $725.86 million, up from $341.36 million in February.
Historical trend favours domestic dominance, but March signals shift
Over the past 18 years, domestic investors have consistently held the majority share in Nigeria’s equities market. Between 2007 and 2024, domestic transaction volume rose from N3.556 trillion to N4.735 trillion, while foreign transactions grew from N616 billion to N852 billion.
However, March 2025 marked a potential inflection point. For the first time in over a year, foreign investors outperformed domestic investors in monthly trade value, considered a rare occurrence on the NGX.
For Q1 2025, the NGX reported total transactions of N2.232 trillion, with foreign investors contributing N814.05bn (36.47%) and domestic participants accounting for N1.41798tn (63.53%). This contrasts sharply with Q1 2024, where foreign trades constituted just 13.77 per cent of the market, and domestic trades represented 86.23 per cent, reflecting the increasing sensitivity of Nigeria’s equities market to external investor flows amid the ongoing economic reforms.
