By Peter Egwuatu
Foreign investment outflow from the stock market exceeded inflow by 26.6 % in February 2025 indicating declining participation by foreign investors.
There are indications that foreign investors’ participation in the Nigerian stock market has declined as foreign outflow surpassed the inflow Vanguard’s analysis from the latest data released by the Vanguard analysis of the Domestic and Foreign Portfolio report of the NGX, showed that foreign investment outflow in February 2025 stood at N24.60 billion, higher than the inflow of N18.05 billion.
Meanwhile, the foreign outflow declined by 46.3 % to N24.60 billion in February 2025 from N45.85 billion in January 2025.
Similarly foreign investment inflow declined by 29.7% to N18.05 billion in February 2025 from N25.66 billion in January 2025.
Consequently, total foreign investment in the NGX which includes both inflow and outflow declined by 40.3 % to N42.65billion in February 2025 from N71.51billion in January 2025.
According to the domestic and foreign portfolio report of the NGX, the total transactions at the Exchange decreased by 16.07% to N509.47 billion in February 2025 from N607.05 billion in January 2025.
The performance of the month under review when compared to the performance in February 2024 revealed that domestic investors accounted for 84 per cent of total transactions executed while foreign investors accounted for the balance of 16 per cent.
Further analysis of the total transactions executed between February and January revealed that domestic transactions fell by 12.83% to N466.82 billion in February 2025 from N535.64 billion in January 2025.
Market analysts attributed the decline to the increase preference for debt securities by investors due to attractive high yields.
The report also showed that institutional investors outperformed retail investors by 8%. A comparison of domestic transactions in the current month and prior month (January 2025) revealed that retail transactions decreased by 19.76% to N214.51 billion in February 2025 from N267.35 billion in January 2025.
However, the institutional composition of the domestic market decreased by 5.92% from N268.19 billion in January 2025 to N252.31 billion in February 2025.
Reacting to the performance of the portfolio investment, analysts at InvestData Consulting stated: “We highlight that the lower participation in the local bourse may be primarily attributed to investors’ preference for debt securities due to attractive yields in the fixed-income market”.
Commenting as well, David Adonri, analyst at Highcap Securities Limited, noted that the higher foreign outflows are a sign that investors are repatriating profits.
“If the outflow exceeds the inflow, it indicates that foreign investors are taking profits back to their home countries. The volatility of the naira also impacts investor confidence; every investor prefers to operate in a stable environment.
“The market has seen some capital appreciation in stocks, but the presence of foreign investors is no longer as dominant, and their departure will have a less severe impact on the market now,” he said.
“While the exit of foreign investors might reduce the supply of foreign currency in the market, it won’t significantly destabilise the economy as long as domestic participation remains strong and macroeconomic indicators are growing” he added.
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