A Resurgence of Foreign Investment in the Nigerian Stock Market: March 2025 Performance Analysis
The Nigerian Exchange Limited (NGX) witnessed a dramatic surge in trading activity in March 2025, driven primarily by a significant influx of foreign investment. Total transactions for the month skyrocketed to N1.12 trillion, a remarkable 118.95% increase from the N509.47 billion recorded in February. This resurgence in market activity was largely attributed to the substantial participation of foreign investors, who accounted for 62.74% of total equity transactions, a clear indication of renewed confidence in the Nigerian market. Foreign portfolio transactions saw an astounding 1,541% jump, reaching N699.89 billion in March, compared to a modest N42.65 billion the previous month. The NGX attributed this phenomenal growth to a series of significant block trades executed by foreign investors, signaling a potential shift in investment strategies and heightened interest in specific Nigerian equities.
While foreign participation soared, domestic transactions experienced a contrasting decline. The total value of domestic trades dipped by 10.98% to N415.62 billion in March, down from N466.82 billion in February. Within the domestic segment, institutional investors maintained a slight edge, contributing N218.50 billion, while retail investors accounted for N197.12 billion. This 6% difference highlights the continued dominance of institutional players in the domestic market, although the overall contraction in domestic activity raises questions about investor sentiment within Nigeria. Despite the significant foreign inflows, the market maintained a relative equilibrium, with foreign inflows of N349.97 billion almost perfectly mirroring foreign outflows of N349.92 billion. This balance suggests a strategic approach by foreign investors, carefully balancing their acquisitions with divestitures.
Analyzing the year-to-date performance, the trend of increased foreign participation becomes even more apparent. From January to March 2025, foreign investors injected a substantial N814.05 billion into the market, representing 36.47% of the total N2.23 trillion transactions recorded. This figure stands in stark contrast to the same period in 2024, when foreign investment totaled only N213.18 billion, a mere 13.77% of the total N1.55 trillion transactions. The data clearly indicates a growing appetite for Nigerian equities among foreign investors, signifying increased confidence in the market’s potential. The robust performance in March 2025 also represents a substantial 107.14% increase compared to the N538.54 billion recorded in March 2024, further reinforcing the year-on-year improvement in market turnover.
Interestingly, the fluctuations in the exchange rate, which moved from N1,492.49/$1 in February to N1,536.82/$1 in March, did not appear to deter foreign investors. Their continued engagement despite the currency volatility suggests a long-term perspective and a belief in the underlying strength of the Nigerian economy and its stock market. Examining the long-term trends, total domestic transactions have witnessed a steady growth of 33.15% over the past 18 years, rising from N3.56 trillion in 2007 to N4.74 trillion in 2024. Foreign transactions also exhibited positive growth over the same period, increasing by 38.31% from N616 billion to N852 billion. While domestic transactions historically dominated the market, constituting 85% of the total in 2024 compared to 15% foreign participation, the 2025 data suggests a potential shift in this dynamic. The increased activity of foreign investors signals a narrowing gap and the possibility of a more balanced market landscape in the future.
The NGX attributed the surge in foreign inflows in March 2025 primarily to large-volume block trades, which are often associated with institutional investments or strategic asset reallocations by large funds. These block trades typically involve significant volumes of shares and can significantly impact market activity. The increased prevalence of such trades indicates a strategic and concerted effort by foreign institutional investors to gain exposure to the Nigerian market. This trend underscores the growing recognition of Nigeria as an attractive investment destination, despite the inherent challenges and volatilities associated with emerging markets.
It is crucial to contextualize the March 2025 performance against the backdrop of the preceding month. The PUNCH reported a significant decline in trading activity in February 2025, with total transactions dropping by 16.07% to N509.47 billion from N607.05 billion in January. This decline highlights the inherent volatility of the market and emphasizes the significance of the rebound observed in March. The resurgence in March, driven by foreign investment, suggests a potential turning point and renewed optimism within the market. However, the sustainability of this growth and the continued engagement of foreign investors will depend on a variety of factors, including macroeconomic stability, regulatory reforms, and the overall performance of the Nigerian economy.
