Foreign, Domestic Investors’ Transaction in Stock Market Increased to N4.19trn in H1

Kayode Tokede

Following the sustained investors’ confidence on the Nigerian equities market, total total transactions by foreign and domestic investors at the local bourse increased to N4.19 trillion in the first half (H1) of 2025, about61.07per cent increase when compared to N2.6 trillion in first half of 2024.

The latest “domestic & foreign portfolio participation in equity trading” report released by the Nigerian Exchange Limited (NGX), showed that total transactions by both foreign and domestic investors in stocks trading  sustained its positive momentum amid low yield in government securities, among other factors.

Analysis of the numbers showed that total foreign portfolio transactions moved to N1.12trillion in H1 2025, representing an increase of 110.06 per cent from N540.48 billion in H1 2024, while total transactions by domestic investors in H1 2025 stood at N3.06 trillion, about 48.18 per cent increase from N2.06 trillion in H1 2024.

In the period under review, foreign and domestic investors transactions performance represented a new record for the stock market, driven by Pension Fund Administrators (PFAs) and domestic high network investors increasing participation.

Consequently, the market capitalisation gained N13.2 trillion from N62.763 trillion at the beginning of the year to close at N75.961 trillion at the end of June 30, 2025.

The report revealed that in the H1 2025, Foreign Portfolio Investments (FPIs) now account for 27.08 per cent of transactions at the bourse, as against the situation in the previous year when foreign transactions amounted to 20.75 per cent  of the market’s transactions.

On the other hand, the proportion of participation by domestic investors dropped from 79.25 per cent in the H1 2024 to 72.92 per cent in H1 2025. 

The surge in foreign investors’ participation is in the backdrop of Central Bank of Nigeria (CBN) reforms in the foreign exchange market aimed at enhancing transparency, compliance, and market stability.

The reforms are part of the CBN’s broader strategy to create a fairer, more stable foreign exchange market and support economic growth through better monetary policies.

In tandem with these reforms, the CBN so far in 2025 has maintained status quo on Monetary Policy Rate (MPR), with the goal of curbing inflation and stabilising the naira, a move supported by the International Monetary Fund (IMF).

The NGX report indicated upbeat across the buy and sell sides of foreign transactions. Foreign inflows jumped to N559.25 billion in H1 2025,from  N229.07billion in H1 2024. 

Outflows, on the other hand, moved from N311.41 billion in H1 2024 to N576.09 billion in H1 2025.

Domestic retail investors transaction moved to N1.47 trillion in H1 2025, up by 47.5per cent from N999.21 billion in H1 2024, while domestic institutional investor transaction stood at N1.59 trillion in H1 2025, an increase of 48.96 per cent from N1.06 trillion reported by the NGX in H1 2024.

Analysts attributed the upbeat at the stock market to the increasing attractiveness of the Nigerian market to foreign investors, ongoing economic reforms, resilient earnings by Nigerian companies, exchange rate differential, ongoing banking recapitalisation and the reform in the oil sector.

The report stated that, the historical analysis of domestic and foreign transactions, revealed that over an 18-year period, “domestic transactions increased by 33.15per cent from N3.556 trillion in 2007 to  N4.735 trillion in 2024; whilst foreign transactions also increased by 38.31per cent from N616 billion to N852 billion over the same period.

“Total domestic transactions accounted for about 85per cent of the total transactions carried out in 2024, whilst foreign transactions accounted for about 15per cent of the total transactions in the same period. The transaction data for 2025 shows that total domestic transactions are circa N3.058 trillion, whilst total  foreign transactions are circa N1.135 trillion.”

Analysts believe the Nigerian stock market showed less volatility signs amid a new era of unpredictability, marked by tariff threats and rising global tensions, that may prompt emerging market investors to look for shelter in frontier markets that are relatively safe from US President Donald Trump’s trade policy shifts.

Speaking, the Vice President, Highcap Securities Limited, Mr. David Adnori attributed the increase in foreign investors participation to the clearing of foreign exchange backlogs by the federal government stressing that the move increased investors’ confidence and drove the rally in the stock market.

“The increase in yield on debt instruments attracted foreign investors to the debt market. The combination of all these factors increased FPI into the capital market.In summary, Nigeria’s high-yield environment, recent regulatory reforms, a large and growing market, and supportive international signals make it an attractive destination for foreign investors seeking growth and diversification,” he added.

Analysts at Coronation in a report stated that fuel subsidy removal, liberalising the forex market and monetary policy tightening reforms by the present administration have played a pivotal role in turning the tide.

The firm in a report titled, “Nigeria’s Bold Economic Reforms: How Investors Can Benefit from New Opportunities in 2025,” said the government, through CBN, removed its hard peg on the Naira and allowed the exchange rate to be influenced more by market forces.

“This removed the subsidy on some US Dollar payments as well as the preferential treatment of some interests. Alongside this, the CBN cleared a backlog of dollar claims from previous years, which improved confidence in the market,” the firm explained.

The firm expressed optimism that these reforms have improved the attractiveness of Nigeria as an investment location for foreign investors while also encouraging local investors to invest more as well.

“There are more reforms that need to be put in place to further improve the investing and business environment but this is a good start,” the firm stated.