June 01, (THEWILL) – Investors on the Nigerian Exchange (NGX) recorded a significant gain of N7.69 trillion in market capitalisation, year-to-date, in the month of May, as increased domestic portfolio showed sustained upward trend.
Aside from the heightened tempo in domestic portfolio performance, the market rally was also fueled by a combination of positive macroeconomic indications, renewed investor sentiment, and strategic positioning by major institutional investors.
This coincided with the corporate earning season as listed companies reported impressive results. First-quarter financial results of major companies, particularly in the banking, telecoms, and consumer goods sectors were majorly impressive.
These earnings reports, coupled with strong dividend declarations, especially from Tier-1 banks, reinforced investment appetite of fortune hunters taking positions amidst oscillating macroeconomic outlook.
Market capitalisation of listed equities hit N70.69 trillion at the close of trading on Friday, May 30, adding a substantial N7.69 trillion or 12.26 percent to the N62.76 trillion that closed trading on December 31, 2024.
Also, the All-Share Index, which measures the performance of listed equities, rose by 8,815.61 points to 111,742.01 points from 102.926.40 points as of December 2024 which formed the opening figure for 2025, constituting an 8.56 percent growth year-to-date.
A major development was the significant withdrawal by foreign investors from the NGX which saw a spike in domestic portfolio, signaling renewed investor confidence especially among the local players.
Foreign portfolio investment into Nigeria’s equities market fell sharply by 92.39 percent in April 2025, as inflows dropped to N26.64 billion, compared to N349.97 billion recorded in March.
The significant decline, driven largely by the absence of block trades that boosted March activity, comes amid continued global uncertainty and growing caution among international investors. Investors are becoming more cautious in their choice of windows.
According to data from the Nigerian Exchange (NGX), total foreign transactions plummeted by 90.99 percent, from N699.89 billion in March to N63.07 billion in April. Inflows accounted for a mere N26.64 billion, while outflows stood at N36.43 billion, resulting in a net capital outflow of N9.79 billion for the month.
A major point is that the decline in April represents a sharp reversal from the strong foreign interest recorded in March, when foreign transactions made up 62.74 percent of total trade.
In April, foreign participation plunged to just 13.08 percent, reflecting a weakened appetite for Nigerian equities as investors navigate risks linked to geopolitical headwinds.
The data revealed that total transaction value on the NGX dropped by 56.79 percent, from N1.115 trillion in March to N482.04 billion in April. However, compared to April 2024, when the total was N346.23 billion, the market grew by 39.22 percent year-on-year.
By this scenario, domestic investors once again dominated the market, accounting for N418.97 billion or 86.92 percent of total trade in April, marking a slight increase of 0.81 percent from N415.62 billion in March.
The report showed that within the domestic segment, institutional activity rose by 8.7 percent , from N218.50 billion in March to N237.66 billion in April, signaling increasing participation from pension funds, asset managers, and corporates.
In contrast, retail investor activity dropped by 8.02 percent, from N197.12 billion to N181.31 billion, indicating a more cautious stance among individual investors.
Institutional investors outperform retail by 14 percent in April, continuing a broader trend observed throughout the year. As of April 2025, institutional trades have reached N976.66 billion, while retail trades total N860.29 billion.
Despite the surge in foreign trade in March, the year-to-date balance remains negative. Foreign inflows between January and April stood at N420.32 billion, while outflows reached N456.80 billion. This leaves a net outflow of N36.48 billion, highlighting the continued caution among foreign players.
Overall, domestic investors accounted for 67.68 percent of total market activity YTD, with foreign investors contributing 32.32 percebt. This is a notable shift from 2024, when foreign trades made up just 13.77 percent of the market, but the sustainability of this trend remains in question.
For Q1 2025, total transactions stood at N2.232 trillion, with foreign trades accounting for N814.05bn (36.47 per cent) and domestic trades at N1.417tn (63.53 per cent).
This is a significant change from Q1 2024, when foreign investors contributed just 13.77 per cent and domestic trades dominated at 86.23 per cent.
The sharp rise in foreign trades and outflows is taking place against the backdrop of reforms and exchange rate instability.
Since mid-2023, the Central Bank of Nigeria has implemented FX liberalisation and tightened monetary policy in a bid to attract foreign capital and tame inflation. However, the naira’s depreciation—from N1,492.49/$1 in February to N1,536.82/$1 in March—and inflationary pressures have dampened confidence.
Analysts at Cordros Securities said, “In the near term, we expect domestic investors to continue contributing the most to total transaction value, with the anticipated decline in yields in the fixed income market supporting buying activities. On the other hand, while a more efficient FX market is expected to support foreign investors’ participation in the equities market, existing global uncertainties remain a downside risk to inflows.
“In the week ahead, despite this week’s positive momentum, we expect sentiment to turn cautiously optimistic amid ongoing global uncertainties—especially around trade tensions—with market direction hinging on macroeconomic updates and corporate developments,” Cordros said in a note to their investors on Friday, May 30.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
