Foreign Investment Soars: Nigerian equities market sees significant growth

Foreign portfolio investors (FPIs) have increased their transactions in the Nigerian equities market, trading N996.03 billion worth of stocks during the first five months of 2025, in contrast to N458.29 billion in the same timeframe of 2024. This increase accounts for 29.17% of the total value of stocks traded on the Nigerian Exchange Limited (NGX).

Why FPIs’ Are Bullish in Nigeria

The rise of FPIs in the Nigerian equities market can be linked to various factors. The relative stability of the economy has enhanced investor confidence. Numerous quoted companies’ shares are perceived as undervalued compared to their intrinsic values, rendering them appealing to FPIs. Moreover, the enhanced liquidity in the forex market, a result of the Central Bank of Nigeria’s initiatives to regulate foreign exchange, has contributed to a relatively stable naira. Additionally, leading firms, especially in the banking, telecommunications, and consumer goods sectors, have reported robust first-quarter earnings with improved margins, thereby bolstering investor interest in their stocks.

A Closer Look at FPI Transactions

Presented below is an analysis of FPI transactions within the Nigerian equities market for the initial five months of 2025:

●     January: N71.51 billion (11.78% of total equity transactions), comprising inflows of N25.66 billion and outflows of N45.85 billion.

●     February: N42.65 billion (8.37% of total equity transactions), with inflows amounting to N18.05 billion and outflows totaling N24.60 billion.

●     March: N699.89 billion (62.74% of total equity transactions), featuring inflows of N349.97 billion and outflows of N349.92 billion.

●     April: N63.07 billion (13.08% of total equity transactions), including inflows of N26.64 billion and outflows of N36.43 billion.

●     May: N118.91 billion (16.98% of total equity transactions), with inflows of N66.11 billion and outflows of N52.80 billion.

The Nigerian equities market is anticipated to maintain its growth trajectory, fueled by heightened investor confidence, advancements in digitalization, and an increase in foreign participation. Foreign Portfolio Investors (FPIs) are demonstrating a renewed interest in the market, spurred by macroeconomic stability and clear policy directions.

The market has experienced notable growth in foreign portfolio investment, propelled by economic stability, undervalued stocks, and enhanced forex liquidity. The outlook appears promising, with rising investor confidence and expanding foreign participation. Nonetheless, it is essential to keep a close watch on the market’s developments and tackle any potential challenges that may emerge.