Local investors have continued to show stronger confidence in the equities market as total domestic transactions in the first-half (H1) of 2025 stood at an estimated N3.1 trillion.

However, foreign participation is picking up momentum, with total foreign transactions hitting N1.1 trillion, an improvement from N996 billion recorded between January and May 2025.

Latest Nigerian Exchange Limited (NGX) Domestic and Foreign Portfolio Investment Report for June 2025 indicated that total transactions rose by 11.1 per cent from N700.5 billion in May to N778.7 billion in June.

Domestic transactions grew by 9.9 per cent, rising from N581.6 billion in May to N639.34 billion in June. Foreign transactions saw a stronger growth rate of 17.2 per cent, moving from N118.9 billion (about $74.97 million) in May to N139.3 billion (about $91.07 million) in June.

Operators argued that this notable uptick in foreign investor participation on NGX was an indication of a possible turning point in sentiment among offshore portfolio managers.

According to them, the trend could signal the beginning of a gradual re-entry of foreign capital into the country’s equities market, following years of cautious withdrawal driven by macroeconomic volatility and foreign exchange constraints.

Although domestic investors continue to dominate transaction volumes, the recent acceleration in foreign participation is being interpreted as a promising development for market liquidity.

The operators also pointed out that the resurgence in foreign interest may serve as a confidence booster for other classes of investors, while also improving the depth and resilience of the market.

President of NewDimension Shareholders Association of Nigeria, Patrick Ajudua, described the rise in foreign portfolio inflows as a welcome development and a sign of growing global appetite for Nigerian risk assets.

He noted that despite persistent global economic uncertainties and Nigeria’s structural challenges, foreign investors are beginning to reposition in anticipation of improved macroeconomic stability and policy consistency.

According to Ajudua, the increased interest from foreign investors is likely driven by a combination of factors, including recent economic reforms by the government, efforts to stabilise the foreign exchange market, and the relatively low valuation of Nigerian stocks compared to their emerging market peers.

These conditions, he said, have made Nigerian equities more attractive to offshore investors seeking opportunities for higher returns in underpriced frontier and emerging markets.

“Although the volume of foreign transactions is still trailing that of local investors, the momentum we are seeing suggests that foreign investors are gradually returning, possibly encouraged by the reforms and a more flexible foreign exchange regime.

“If this trajectory is sustained, it could mark the beginning of a broader trend of foreign capital reallocation into Nigeria, which would ultimately enhance market efficiency and deepen investor confidence.”

The renewed interest from foreign investors, if sustained, is expected to bring long-term benefits to the Nigerian capital market, including improved price discovery, greater portfolio diversification, and enhanced global visibility.

Further breakdown of the report showed that institutional investors remained the key drivers of market activity in the composition of domestic investment for the month of June 2025.

Institutional transactions rose by 49.4 per cent from N244.13 billion in May to N364.7 billion in June 2025. Conversely, retail investors pulled back slightly, with their transactions declining by 18.6 per cent from N337.5 billion in May to N274.6 billion in June, suggesting a cautious approach by individual participants despite the overall bullish sentiment.

Over a broader 18-year trajectory, domestic participation in the Nigerian capital market has risen by 33.1 per cent, climbing from N3.6 trillion in 2007 to N4.7 trillion in 2024.

Foreign portfolio investment also showed some growth over the same period, though at a slightly higher pace, increasing by 38.3 per cent from N616 billion in 2007 to N852 billion in 2024.