The Nigerian capital market witnessed a significant shake-up in the first half of 2025, as foreign investors sold off equities worth N576.09bn between January and June. This represents an 85% jump from the N311.41bn withdrawn during the same period in 2024, signaling growing caution over Nigeria’s macroeconomic environment and policy direction.
According to the June 2025 Domestic and Foreign Portfolio Investment Report released by the Nigerian Exchange (NGX), total foreign trading volume stood at N1.14tn for H1 2025, doubling from N540.48bn in H1 2024. Despite recording foreign inflows of N559.25bn, the market ended the period with a net negative foreign position of N16.84bn.
Analysts attribute the surge in capital flight to multiple factors, including uncertainties stemming from U.S. President Donald Trump’s unpredictable trade policies, higher yield rates on Nigerian Treasury Bills (T-bills), and lingering foreign exchange (FX) liquidity concerns.
While foreign investors pulled back, domestic participation surged. Nigerian investors accounted for 72.92% of total market activity, with N3.06tn in trade volume during H1 2025 — a 41.5% increase from N2.17tn in the same period last year. Institutional investors contributed N1.59tn, while retail investors traded N1.47tn, indicating strong local engagement.
The total value of market transactions in the six-month period rose to N4.19tn, marking a 61% growth from the N2.60tn recorded in H1 2024. However, experts warn that while transaction volumes are up, the quality and sustainability of investments remain a concern, especially with retail investor participation slowing in recent months.
Market momentum varied across the months:
March 2025 saw the highest trading activity, totaling N1.29tn. Foreign inflows peaked at N349.97bn, while outflows reached N205.54bn.
April and May saw reduced momentum due to Trump’s announced 14% tariff on Nigerian goods, causing inflows to drop to N26.47bn in April.
June offered a slight rebound, with inflows recovering to N72.82bn and outflows moderating to N66.49bn. The naira’s appreciation at NAFEM from N1,586.15/$1 in May to N1,529.71/$1 in June helped ease repatriation concerns.
Institutional trades increasingly dominated domestic activity, rising 49% in June alone to N364.71bn, while retail investor activity fell by 18.6% to N274.63bn. Experts cite inflationary pressure, which has reduced disposable income, as a key reason for waning retail involvement.
Financial analyst Johnson Chukwu noted that while FPI activity remains high, the focus has shifted to fixed-income instruments due to their safety and high returns.
“OMO and T-bills offered yields of up to 24% earlier in the year. Most of the $5.2bn portfolio investment in Q1 2025 went into money market instruments, not equities,” he said.
Chukwu also cautioned that Nigerian equities may be seen as overvalued, with over 40% gains in the last year despite limited improvement in economic fundamentals.
Olatunde Amolegbe, CEO of Arthur Stevens Asset Management, emphasized that foreign portfolio investors are profit-driven traders. “Their exits don’t imply permanent loss of interest. Most come in via fixed income and transition to equities later,” he explained.
He added that Nigeria remains the ultimate destination for foreign capital in West Africa despite Ghana serving as an entry point. “The size of our fixed-income market attracts big-ticket FPIs before they diversify into equities.”
Research analyst Dayo Adenubi echoed these sentiments, stating that most FPIs use quantitative models and operate with short-term strategies. “They are not necessarily long-term investors, but their liquidity boosts price discovery in our market.”
Despite the increased turnover in Nigeria’s capital market, concerns over policy consistency, FX repatriation, and inflation remain hurdles to long-term investor confidence. The dominance of institutional over retail investors further underscores the need for inclusive economic policies that empower households to invest.
As the Nigerian economy navigates global and domestic headwinds, a balanced investor mix and policy clarity will be critical for sustainable market growth.