Trading activity on the Nigerian Exchange Limited (NGX) dipped in February 2025 as foreign portfolio transactions declined amid rising economic uncertainties.
According to the latest Domestic and Foreign Portfolio Investment Report released by the NGX, total foreign transactions dropped by 40.36% to ₦42.65 billion in February, down from ₦71.51 billion recorded in January.
The decline in foreign participation was driven by weaker inflows and reduced outflows, signalling a cautious stance by offshore investors amid ongoing macroeconomic headwinds.
Foreign inflows decreased by 29.67% to ₦18.05 billion in the review period while foreign outflows fell more steeply by 46.33% to ₦24.60 billion.
As a result, foreign investors accounted for only 8.37% of total market activity in February, compared to 11.78% in the previous month.
In contrast, domestic investors continued to dominate the market, contributing 91.63% of total transactions. Despite this strong presence, domestic trading activity also declined, falling by 12.83% to ₦466.82 billion from ₦535.54 billion in January.
A closer look at the domestic segment shows that institutional investors were more resilient, accounting for ₦252.31 billion in February, representing a 5.92% decrease from the previous month. Retail investors, however, posted a sharper contraction, with transaction value dropping by 19.76% to ₦214.51 billion from ₦267.35 billion in January.
The decline in both foreign and domestic transactions pulled total market turnover down by 16.07% month-on-month to ₦509.47 billion in February, compared to ₦607.05 billion in January.
Analysts say the sharp drop in foreign participation reflects lingering concerns around currency volatility, policy uncertainty, and a general risk-off sentiment among international investors toward frontier markets.
Despite recent reforms by the Central Bank of Nigeria aimed at stabilising the foreign exchange market, confidence remains fragile.
Year-to-date data shows that total transactions for January and February 2025 stood at ₦1.12 trillion, with domestic investors contributing ₦1 trillion, or 89.78%, while foreign investors accounted for ₦114.16 billion, representing 10.22% of the market.
Compared to the same period in 2024, overall market activity increased by 10.62%, although the proportion of foreign participation continues to trend downward.
Long-term trends also reflect the structural dominance of local investors. Between 2007 and 2024, domestic participation rose by 33.15% to ₦4.73 trillion, while foreign transactions grew by 38.31% to ₦852 billion.
However, foreign investors have consistently maintained a lower share of the market, averaging just 15% of total transactions in 2024.
With capital flight continuing to outpace inflows—evidenced by the ₦455.62 billion in foreign investor withdrawals from the Nigerian stock market in 2024—market stakeholders are urging policymakers to fast-track structural reforms and ensure policy consistency to attract sustainable foreign investment.
