NGX Suffers N45.8bn Overseas Capital Outflow in January

Overseas traders withdrew N45.85bn from the Nigerian inventory market in January 2025, an outflow that considerably overshadowed the N25.66bn recorded as overseas inflows inside the identical interval.

The newest Nigerian Trade Home and Overseas Portfolio Funding Report revealed that overseas outflows accounted for 64.12 per cent of whole overseas transactions on the change, reinforcing considerations over declining overseas participation available in the market regardless of the relative stability of the naira.

It confirmed that whole overseas transactions elevated by 7.13 per cent, rising from N66.75bn in December 2024 to N71.51bn in January 2025.

Nevertheless, this improve was largely pushed by traders liquidating their holdings, as evidenced by the a lot bigger outflow in comparison with inflows.

This pattern signifies that whereas some overseas traders should still interact with the Nigerian market, a larger proportion choose to exit, contributing to capital flight.

The withdrawal of overseas funds from the market got here amid a 9.89 per cent decline in whole fairness transactions on the NGX, which fell from N673.66bn in December 2024 to N607.05bn in January 2025.

On a year-on-year foundation, whole transactions dropped by 6.83 per cent from N651.52bn recorded in January 2024.

This means that investor sentiment remained subdued as each overseas and home gamers exercised warning in response to prevailing financial situations.

The report learn, “On a month-to-month foundation, Nigerian Trade Restricted polls buying and selling figures from market operators on their Home and Overseas Portfolio Funding flows.

“As at 31 January 2025, whole transactions on the nation’s bourse decreased by 9.89 per cent from N673.66bn (about $438.64m) in December3 2024 to N607.05bn (about $410.84m) in January 2025.

“The efficiency of the present month when in comparison with the efficiency in January 2024 (N651.52bn) revealed that whole transactions decreased by 6.83 per cent. In January 2025, the overall worth of transactions executed by Home Traders outperformed transactions executed by Overseas Traders by circa 76 per cent.”

The report additional disclosed that overseas traders’ share of whole market transactions stood at 11.78 per cent, with home traders dominating with 88.22 per cent.

This represents a slight improve from 9.91 per cent overseas participation in December 2024 however stays far beneath historic averages when overseas traders performed a extra substantial function in market liquidity and depth.

The disparity between inflows and outflows additional highlights the persistent reluctance of overseas traders to commit contemporary funds to Nigerian equities.

A more in-depth take a look at home transactions revealed a notable shift in investor behaviour. Institutional traders, who historically drive market stability, considerably decreased their participation, with transactions falling by 33.95 per cent from N406.04bn in December 2024 to N268.19bn in January 2025.

This decline contrasts sharply with the retail section, which noticed a 33.10 per cent improve, as retail transactions rose from N200.87bn to N267.35bn inside the identical interval.

This shift means that whereas institutional traders stay cautious, retail traders are exhibiting elevated enthusiasm, presumably in search of discount alternatives in a market the place valuations could seem engaging.

Regardless of considerations over overseas outflows, the change charge confirmed indicators of stability, with the naira appreciating from N1,535.81/$ in December 2024 to N1,478.22/$ in January 2025.

This stability, nonetheless, was not enough to reverse overseas investor sentiment, as broader macroeconomic challenges persist.

The NGX report additionally offered a broader historic context, exhibiting that over an 18-year interval, home transactions elevated by 33.15 per cent from N3.556tn in 2007 to N4.735tn in 2024, whereas overseas transactions grew by 38.31 per cent, from N616bn to N852bn over the identical interval.

Nevertheless, overseas participation has steadily declined in recent times, with overseas traders accounting for under 15 per cent of whole transactions in 2024, whereas home traders managed 85 per cent of the market.

There’s a want for overseas traders to extend their stake in Nigerian equities and for extra steady macroeconomic insurance policies, improved market transparency, and strengthened investor confidence.

Nevertheless, the Central Financial institution of Nigeria’s financial tightening insurance policies, designed to curb inflation and stabilise the naira, are progressively boosting renewed overseas curiosity within the fairness market.