Foreign transactions plunge 75% on weak block trades as NGX activity cools in January
Trading data for the first month of 2026 reveal a sharp contraction in offshore participation, as Foreign transactions plunge 75% on weak block trades, reversing the unusually strong activity recorded at the close of last year.
According to the Domestic and Foreign Portfolio Investment Report released by the Nigerian Exchange Limited, total foreign transactions fell from N0.45809tn in December 2025 to N0.11414tn in January 2026 — a 75.08 per cent month-on-month decline.
The Exchange clarified that the drop does not signal a systemic capital flight but reflects the absence of large negotiated block trades that had significantly inflated December’s figures.
Block trade effect fades
Market operators say the headline narrative — Foreign transactions plunge 75% on weak block trades — is largely technical rather than structural.
In December 2025, foreign participation was boosted by sizable off-market block transactions involving institutional investors repositioning portfolios ahead of year-end reporting cycles. Such trades, typically executed between large counterparties, can temporarily distort monthly statistics.
With those transactions absent in January, activity reverted to more typical levels, exposing the underlying pace of foreign participation.
Total foreign deals in January were valued at approximately $82.32m, compared to about $319.05m in December, underscoring the scale of the correction.
Overall market turnover declines
The slowdown was not limited to offshore investors. Total transactions on the Exchange fell 37.55 per cent month-on-month, dropping from N1.3804tn in December to N0.8620tn (about $621.67m) in January.
While Foreign transactions plunge 75% on weak block trades captured attention, domestic turnover also softened amid cautious positioning by institutional investors.
However, on a year-on-year basis, the market remains more active than in January 2025, when total transactions stood at N0.6071tn. The 41.99 per cent annual increase suggests that despite short-term volatility, liquidity conditions are stronger compared to a year earlier.
Domestic investors consolidate dominance
With offshore flows receding, domestic investors strengthened their grip on the market, accounting for 86.76 per cent of total participation in January.
Total domestic transactions outpaced foreign trades by roughly 74 per cent, reaffirming the structural tilt of Nigeria’s equity market toward local capital.
Within the domestic segment, institutional and retail investors displayed divergent behaviour. Retail transactions rose 12.92 per cent to N0.35986tn, indicating sustained interest from individual investors.
In contrast, institutional domestic participation fell 35.73 per cent to N0.38797tn. Despite the decline, institutions maintained a slight edge, holding approximately 52 per cent of domestic market share.
Analysts interpret the divergence as a sign of tactical profit-taking among pension funds and asset managers, while retail participants continued to accumulate selected counters.
Long-term growth trajectory intact
Although Foreign transactions plunge 75% on weak block trades dominated January’s data, a broader historical perspective paints a more resilient picture of market evolution.
Between 2007 and 2025, domestic transactions grew by 160.83 per cent, rising from N3.5560tn to N9.2747tn annually. Over the same period, foreign transactions expanded by 329.87 per cent, increasing from N0.6156tn to N2.6475tn.
This longer-term trend indicates that foreign portfolio investors, despite episodic volatility, have deepened engagement with Nigeria’s capital market over nearly two decades.
In 2025 alone, domestic transactions accounted for approximately 78 per cent of total trades, while foreign transactions represented about 22 per cent — a distribution consistent with frontier market dynamics where local institutions provide stability during external shocks.
Macro factors influencing flows
Market observers link January’s moderation to several macroeconomic considerations.
Foreign investors often reassess exposure at the start of a new year, factoring in currency stability, inflation trajectory, monetary policy signals and geopolitical risk.
Global portfolio rebalancing across emerging and frontier markets can also temporarily suppress allocations.
While Foreign transactions plunge 75% on weak block trades suggests a dramatic pullback, analysts caution against overinterpreting one month’s data without considering seasonal and structural factors.
The absence of exceptional block trades, rather than deteriorating fundamentals, appears to have driven the contraction.
Implications for liquidity and pricing
Reduced foreign participation can influence liquidity depth and price discovery, particularly in large-cap stocks that typically attract offshore capital.
However, the strong domestic footprint provides a counterbalance. Nigeria’s pension industry, insurance sector and asset managers have progressively increased their market presence, enhancing resilience.
If global risk appetite improves and macro indicators remain stable, foreign inflows could rebound in subsequent months.
Outlook for Q1 2026
Going forward, investors will monitor earnings releases, dividend declarations and policy pronouncements for directional cues.
Should block trades resume or cross-border allocations increase, the narrative that Foreign transactions plunge 75% on weak block trades may quickly reverse.
For now, January’s data reflect a recalibration after December’s surge rather than a sustained retreat.
Market strategists maintain that structural reforms, improved corporate governance standards and currency stability will be decisive in attracting consistent foreign portfolio inflows.
In the interim, domestic investors continue to anchor trading activity, reinforcing the Exchange’s capacity to absorb temporary external shocks.
The coming quarters will determine whether offshore capital regains momentum or whether local participation remains the primary engine of liquidity on the Nigerian bourse.
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