Renewed Foreign Investor Confidence in the Nigerian Exchange (NGX)

Foreign investors continue to play a pivotal role in shaping the performance and resilience of the Nigerian Exchange Group (NGX). Their participation offers critical benefits such as improved market liquidity, deeper capital markets, and increased investor confidence. In recent years, foreign portfolio investment (FPI) trends on the NGX have reflected broader macroeconomic movements and shifts in investor sentiment, both globally and within Nigeria.

In 2024, the NGX experienced a remarkable uptick in foreign capital inflows, with foreign investors injecting approximately ₦344.3 billion into the Nigerian stock market. This surge, representing a 181% year-on-year increase, was fueled by renewed optimism, more market-friendly policies, and the undervaluation of equities. Simultaneously, foreign capital outflows also increased significantly to ₦400 billion, highlighting ongoing caution in response to Nigeria’s macroeconomic environment. While FPIs made up a notable 58% of total capital importation, foreign direct investment remained subdued, reflecting concerns over long-term policy consistency.

By mid-2025, foreign participation remained highly relevant. Between January and June 2025, foreign trades on the NGX totaled approximately ₦1.14 trillion, representing 27% of total market transactions. Domestic investors still dominated with a 73% share, yet foreign activity indicated a rebound. In May 2025, the NGX recorded an 88% surge in foreign investor activity, suggesting renewed global interest in Nigerian equities. However, this growing inflow was accompanied by substantial sell-offs, as foreign investors divested about ₦576 billion worth of equities, leading to a negative net foreign investment position in the first half of the year.

This dual movement—of large inflows and outflows—underscores the speculative nature of many foreign portfolio investments. While their participation contributes to pricing efficiency and market visibility, it also exposes the NGX to external shocks and policy-related shifts. The high activity level by foreign investors reflects both confidence in future returns and caution rooted in Nigeria’s economic vulnerabilities, especially exchange rate instability and inflation concerns.

In essence, foreign investor participation in the NGX plays a complex but essential role. Their return points to improving confidence driven by policy reforms and market attractiveness. However, the volatility in their engagement also highlights the need for long-term economic stability and transparent market governance. Going forward, sustained foreign interest—alongside active domestic participation—remains key to building a deeper, more resilient Nigerian capital market.

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