Foreign Investment in Nigerian Stock Market Hits Annual Low as Economic Pressures Mount
Foreign inflows into the Nigerian Exchange Limited (NGX) plunged to a 2024 low of N11.26 billion in September, as overseas investors withdrew from Nigerian equities in favour of better-yielding alternatives. According to the NGX’s latest Domestic & Foreign Portfolio Investment Report, the decline follows months of waning foreign inflows, which peaked in May at N54.87 billion but have dwindled steadily amid economic volatility.
Cumulative foreign inflows from January to September reached N310.99 billion, a marked increase from N108.93 billion recorded over the same period last year. However, September’s foreign outflow hit N30.15 billion, up from N24.38 billion in August, underscoring an accelerating trend of capital withdrawal. Analysts point to Nigeria’s unstable currency and a restrictive interest rate environment as the main drivers of this shift, with foreign investors seeking safer returns.
The Nigerian naira recently closed at N1652.25 per dollar on the Nigerian Autonomous Foreign Exchange Market, while the Central Bank of Nigeria (CBN) held its benchmark interest rate at 27.25 per cent at its last Monetary Policy Committee (MPC) meeting. Persistently high inflation, which reached 33.88 per cent in October, has led to expectations of another rate hike by the CBN, though likely at a measured pace.
Despite dwindling foreign participation, the NGX saw a 29.9 per cent surge in total transaction volume in September compared to August, reaching N493.01 billion ($307.84 million). Domestic investors continued to dominate the market, conducting approximately 84 per cent more transactions than their foreign counterparts. Year-over-year, September transactions rose by 66.67 per cent, reflecting a strengthened local trading presence in the face of foreign outflows.
Within the domestic sphere, retail investors led the charge, outpacing institutional investors by 28 per cent. Retail transactions surged by 59.42 per cent from N180.72 billion in August to N288.10 billion in September, suggesting an intensifying interest in the market among Nigeria’s individual investors even as foreign capital retreats.
