Paragraph 1: Surge in Equity Turnover and Driving Factors
The Nigerian Exchange Limited (NGX) experienced a remarkable surge in equity turnover during the first half of 2025, reaching N4.19 trillion, a substantial 61% increase compared to the N2.60 trillion recorded in the corresponding period of 2024. This impressive growth signifies a resurgence of investor confidence in the Nigerian capital market, driven by both domestic and foreign participation. Domestic investors continued to dominate the market, accounting for 72.92% of total trades, equivalent to N3.06 trillion. Foreign investors, while representing a smaller portion, contributed significantly with N1.14 trillion, reflecting a growing interest in the Nigerian market. This increased foreign participation can be attributed to ongoing economic reforms, improved market transparency, and renewed optimism about Nigeria’s macroeconomic outlook.
Paragraph 2: Monthly Fluctuations and Investor Behavior
The first half of 2025 witnessed significant fluctuations in monthly equity turnover, reflecting varying investor sentiments and market dynamics. January began with a strong performance of N607.05 billion, primarily driven by domestic investors. February experienced a slight dip to N509.47 billion, while March witnessed a dramatic spike to N1.12 trillion, with foreign investors taking the lead. This surge can be attributed to favorable exchange rate expectations and renewed confidence in the Nigerian economy. April saw a market correction with turnover dropping to N482.04 billion, followed by a rebound in May and June, reaching N700.50 billion and N778.65 billion respectively. These fluctuations highlight the sensitivity of the market to both domestic and international factors.
Paragraph 3: Foreign Portfolio Investment Flows and Capital Repatriation
Foreign portfolio investments (FPIs) played a crucial role in the overall market activity during the first half of 2025. While foreign transactions reached N1.14 trillion, a significant increase compared to the previous year, the data reveals a concerning trend of capital repatriation. Foreign inflows amounted to N559.25 billion, while outflows reached N576.09 billion, indicating a net outflow of capital. This suggests that while foreign investors are showing renewed interest in the Nigerian market, concerns about currency volatility and external market conditions persist. The June figures further emphasize this trend, with outflows exceeding inflows, despite an overall increase in foreign participation.
Paragraph 4: Domestic Investor Dominance and Shifting Dynamics
Domestic investors maintained their dominance in the NGX throughout the first half of 2025, consistently accounting for the majority of trading activity. Within the domestic segment, institutional investors, including pension funds, asset managers, and insurance companies, demonstrated increasing activity. In June, institutional trades surpassed retail transactions by a considerable margin, signifying a shift in market dynamics. While retail participation experienced a decline, possibly due to market volatility and economic pressures, institutional investors exhibited growing confidence in the market, likely influenced by ongoing macroeconomic reforms and improved market stability.
Paragraph 5: Historical Context and Long-Term Trends
An analysis of the NGX’s 18-year historical data reveals a consistent dominance of domestic investors in the Nigerian capital market. Domestic transactions have grown steadily over the years, demonstrating the long-term commitment of local investors to the Nigerian economy. Foreign participation, while fluctuating, has also shown an overall increase, indicative of growing international interest in the Nigerian market. The historical data underscores the importance of domestic investors in providing market stability and liquidity, while also highlighting the potential for increased foreign investment as market conditions improve and investor confidence strengthens.
Paragraph 6: Outlook and Expectations for Continued Growth
The strong equity turnover in the first half of 2025, coupled with increased participation from both domestic and foreign investors, paints a positive picture for the Nigerian capital market. The growing influence of institutional investors and the gradual return of foreign capital suggest a positive trajectory for market growth. However, the persistent trend of capital repatriation by foreign portfolio investors warrants attention. Addressing concerns about currency volatility and external market conditions will be crucial to attracting and retaining foreign investment. As economic reforms continue and macroeconomic fundamentals improve, stakeholders anticipate a further strengthening of the Nigerian capital market in the second half of 2025 and beyond.
