In January 2025, the Nigerian stock market experienced a significant net foreign investment outflow of N20.19 billion, raising concerns about a potential liquidity crunch. An analysis by Vanguard, based on data from the Nigerian Exchange Limited (NGX), revealed that foreign outflows for the month reached N45.85 billion, while foreign inflows amounted to N25.66 billion.
The foreign inflow into the stock market saw a slight decrease of 2.3%, down from N26.26 billion in December 2024. Conversely, foreign outflows increased by 13.2%, rising from N40.49 billion in December 2024. Year-on-year comparisons indicate that foreign outflows in January 2025 outperformed inflows by a substantial 190.6%, with outflows recorded at N45.85 billion compared to N15.78 billion one year prior.
This outflow trend poses challenges for stabilizing the Naira and increasing the external reserves, as foreign investors are likely converting their local currency to dollars for repatriation to more favorable investment environments abroad. Data from the NGX as of January 31, 2025, also showed a 9.89% decrease in total transactions on the exchange, dropping from approximately N455.66 billion (around $438.64 million) in December 2024 to N410.05 billion (about $410.84 million) in January 2025. When analyzed year-on-year, total transactions fell by 6.83%.
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In January 2025, domestic investor transactions outperformed those by foreign investors by approximately 76%. An in-depth review of transaction trends between January 2025 and December 2024 indicated an 11.71% decline in total domestic transactions, which decreased from N78.91 billion in December to N69.54 billion in January. In contrast, total foreign transactions rose by 7.13%, climbing from N66.75 billion (about $43.47 million) to N71.51 billion (about $48.38 million) during the same period.
When analyzing domestic transactions more closely, it was found that institutional investors slightly outperformed retail investors by 0.16%. Additionally, a comparison of domestic transactions between January 2025 and December 2024 showed a significant 33.10% increase in retail transactions, which rose from N19.87 billion in December to N26.35 billion in January 2025. However, institutional transactions faced a notable decline of 33.95%, falling from N40.04 billion in December to N26.19 billion in January 2025.
