Foreign Portfolio Investment Trends Reinforce Market Confidence, Local Dominance Persists
The Nigerian capital market continues to demonstrate a compelling narrative of resilience and adaptability, underpinned by a delicate interplay between foreign portfolio inflows and a resurgent domestic investment base.
According to the latest data released by the Nigerian Exchange (NGX), Foreign Portfolio Investment (FPI) transactions rose marginally by 4.8% month-on-month in July 2025, reaching N145.95 billion (approximately US$95.17 million), up from N139.31 billion (US$91.07 million) recorded in June.
While foreign participation accounted for a modest 8.04% of the overall market turnover of N1.82 trillion, its presence continues to serve as a psychological buffer reaffirming external investor interest and lending a layer of credibility and confidence to the broader market landscape.
However, the defining feature of July’s market dynamics was the remarkable surge in domestic investor activity. Total domestic transactions skyrocketed by 161.1% to N1.67 trillion (US$1.09 billion) from N639.34 billion (US$417.95 million) in June, capturing a commanding 91.96% share of market turnover.
This substantial rise was primarily driven by institutional block transactions, emphasising the dominant and stabilising role of local capital amid ongoing global uncertainties.
The underlying composition of FPI in July revealed a nuanced shift in sentiment. While total foreign transactions increased slightly, inflows fell sharply to N50.48 billion, compared to N72.82 billion in the previous month, suggesting a tempered appetite for new equity exposure.
Conversely, outflows spiked to N95.47 billion, up from N66.49 billion in June, reflecting a cautious rebalancing of offshore positions amidst concerns about currency volatility and macroeconomic headwinds.
On the domestic front, institutional investors led the charge with N1.15 trillion in total trades, a staggering leap from N364.71 billion in June. Notably, the inflow-outflow balance remained healthy, with 58.8% of transactions representing inflows (N677.80 billion) and 41.2% accounting for outflows (N474.75 billion).
Retail participation also exhibited robust momentum, rising to N516.50 billion from N274.63 billion, although the net balance leaned towards outflows (N281.22 billion) over inflows (N235.28 billion) a reflection of cautious optimism among individual investors.
Cumulatively, as of year-to-date (YTD) July 2025, the total transaction value on the NGX stood at N6.01 trillion, a 94.1% increase from N3.10 trillion over the same period in 2024. Domestic investors maintained a dominant position, contributing N4.73 trillion (78.67%) of this volume slightly down from their 80.68% share in 2024.
Meanwhile, foreign investors modestly expanded their footprint, with participation rising to N1.28 trillion (21.33%) compared to N598 billion (19.32%) in the previous year. This trend signals a slow but measured return of foreign confidence, albeit still overshadowed by stronger local capital flows.
The equity market’s positive momentum in 2025 can be attributed to several supportive undercurrents. Strong corporate earnings, improving macroeconomic indicators including moderating inflation and a more stable exchange rate environment have helped elevate investor sentiment.
In addition, a decline in domestic debt yields, coupled with impactful regulatory reforms and strategic corporate actions across key sectors such as telecommunications, financial services, and energy, has fueled sustained interest in equities.
However, the road ahead is not without its risks. Valuation concerns have begun to surface, with rising stock prices prompting intermittent waves of profit-taking. Moreover, the persistence of relatively high fixed-income yields presents a compelling alternative to riskier equity assets, particularly for institutional investors prioritising capital preservation and steady returns.
While foreign participation in Nigeria’s capital markets remains relatively subdued in absolute terms, its role as a sentiment anchor cannot be understated. The incremental uptick in FPI activity despite global headwinds and domestic structural challenges reflects a cautiously optimistic outlook.
Nonetheless, it is the unwavering commitment and depth of domestic capital that continues to provide the bedrock for market stability and growth. Going forward, the sustainability of this momentum will hinge on continued macroeconomic reforms, currency stability, and deepening investor confidence both foreign and domestic. #Foreign Portfolio Investment Trends Reinforce Market Confidence, Local Dominance Persists#
Bears Touches ‘Knock Off’ N2.3trn from Nigerian Stock Market
