New data from the Nigerian Exchange (NGX) reveals a worrying trend: foreign investors sold off a staggering N576.09bn worth of Nigerian stocks between January and June 2025. That’s an 85% increase compared to the same period in 2024.
Foreign investors are pulling a significant amount of money out of Nigerian stocks, a trend that is raising concerns about the long-term health of the nation’s equity market. Between January and June 2025, foreign investors sold off equities worth a staggering N576.09bn on the Nigerian Exchange. This figure represents an 84.97 per cent increase from the amount withdrawn in the same period of 2024. The outflows exceeded foreign inflows, resulting in a net negative foreign portfolio position of N16.84bn over the six months. This surge in foreign trading activity, captured in the NGX’s June 2025 report, points to a complex mix of global and local factors influencing investor decisions.
The data reveals that while foreign capital is actively trading, it’s largely headed for the exit. This trend is happening at a time when domestic investors are showing immense confidence, accounting for over 72 per cent of total market transactions. Domestic activity, led by institutional players, jumped by more than 40 per cent year-on-year, a positive sign that masks the growing concerns over the quality of capital flows. So, why are foreign investors selling off?
According to financial analyst Johnson Chukwu, there are several key reasons. He pointed to inconsistencies in global markets caused by the policies of US President Donald Trump as one factor. More locally, he highlighted the high yields on other Nigerian financial instruments, stating, “We have to recognise that there have been inconsistencies in Mr Trump’s trade policies, but be that as it may, foreign portfolio investors are still very active in the Nigerian financial market. If you look at the Q1 2025 report of capital importation that was published on Tuesday, you will realise that foreign portfolio investment accounted for the greatest share of the total portfolio capital importation.”
Chukwu explained that this money isn’t leaving the country entirely; it’s simply being redirected. “The money is going into fixed income instruments, going into treasury bills, going into OMO instruments, because the returns on those instruments are guaranteed.” He noted that at one point, these instruments were offering yields of 23-24 per cent, which was “quite attractive” to foreign investors. This preference for safer, guaranteed returns is a major driver of the outflows from the equities market, which is perceived as riskier. Chukwu also suggested that foreign investors might believe Nigerian stocks are “overpriced,” adding, “Some of them may be perceiving that our equity instruments are already overpriced, overvalued, because if you consider the market gain of last year and this year, we’ve gotten a gain of more than 40 per cent, and the fundamentals of the economy have not materially changed.”
Adding to this perspective, Olatunde Amolegbe, Managing Director of Arthur Stevens Asset Management, characterized foreign investors as being “mostly traders.” He said, “They are also taking a position with the mindset of making a profit. So if they take a position and think the position has made a profit, they will sell off, typically, like any other investor. It does not mean that they will not come back again.” Amolegbe also described the fixed-income market as a “gateway” for foreign capital, explaining that investors often use safer, more liquid fixed-income instruments before venturing into equities. Research analyst Dayo Adenubi echoed this sentiment, describing foreign portfolio investors as “short-termist” and quantitative, driven by models and the pressure to outperform benchmarks.
Ultimately, the trend shows a market in transition. While foreign investors remain active, they are cautious, with their decisions influenced by global politics, attractive fixed-income yields, and lingering concerns over foreign exchange repatriation and macroeconomic stability. The growing dominance of institutional domestic investors provides a crucial source of market liquidity, but the decline in retail participation—likely due to inflationary pressures eroding disposable income—raises questions about the sustainability of this growth. As Nigeria navigates these complex dynamics, a clear and stable policy environment will be essential to attract the long-term, patient capital needed for sustained market development.