Foreign and Domestic Investors’ Transactions on NGX Drop to ₦908bn in August

The Nigerian Exchange (NGX) experienced a notable decline in trading activity in August 2025, as combined foreign and domestic investors’ transactions dropped to ₦908 billion. This marks a slowdown in capital market activity compared to July, reflecting cautious investor sentiment amid macroeconomic pressures, global uncertainties, and profit-taking strategies.

According to market data, both foreign portfolio investors and local institutional and retail investors reduced their trading volumes, underscoring the prevailing volatility in the equities market. Analysts link this to a combination of factors, including currency fluctuations, high interest rates, and inflationary concerns that have continued to shape investment decisions.

The NGX report showed that domestic investors still accounted for the larger share of activity, but their participation weakened compared to earlier months. Local institutions, who typically dominate trading volumes, scaled back their exposure to equities in favor of safer assets such as government securities, which currently offer attractive yields due to the Central Bank of Nigeria’s tight monetary stance. Retail investors also slowed down, with many preferring to adopt a wait-and-see approach in the face of market uncertainty.

On the foreign investors’ side, capital inflows into the Nigerian market were lower, mirroring broader concerns about emerging markets. Despite recent efforts by the Central Bank to stabilize the naira and improve foreign exchange liquidity, many offshore players remained cautious, waiting for further consistency in policy direction before committing to higher levels of participation.

The ₦908 billion recorded in August represents one of the lowest levels of combined transactions in recent months, raising questions about the resilience of the Nigerian capital market amid economic headwinds. Analysts argue that while domestic participation has kept the market relatively stable, a sustainable rebound requires stronger foreign inflows, which are often a key source of liquidity and long-term stability.

Investment experts say part of the decline is seasonal, as August traditionally records reduced trading activity. However, this year’s slowdown is compounded by broader economic realities, including inflationary pressures, high borrowing costs, and global market uncertainties driven by fluctuating oil prices and shifting interest rate policies in advanced economies.

The Nigerian equities market had started the year on a bullish note, supported by strong corporate earnings and renewed investor optimism around government reforms. However, the rally has slowed in recent months, with profit-taking and cautious trading dominating activity. The market capitalization, which surged past ₦90 trillion earlier in the year, has witnessed fluctuations in line with global and domestic trends.

Despite the slowdown, analysts maintain that the Nigerian market remains attractive in the medium to long term, given its strong corporate fundamentals, rising participation of domestic institutional investors, and ongoing reforms aimed at improving the investment climate. Sectors such as banking, industrial goods, and telecommunications continue to draw interest, though recent bearish runs have led to short-term volatility.

Market operators are urging regulators and policymakers to sustain reforms that enhance transparency, improve ease of doing business, and deepen market products. They argue that initiatives such as the proposed introduction of derivatives and sustainability-linked instruments could help attract more sophisticated investors and diversify market activity.

In addition, stakeholders highlight the need for sustained foreign exchange stability to encourage offshore participation. While recent inflows have supported the naira’s relative stability, investors remain watchful for signs of lasting consistency in currency and fiscal policies before increasing their exposure.

As September trading progresses, market watchers expect a cautious recovery, driven by bargain hunting in undervalued stocks and anticipation of third-quarter corporate earnings reports. The performance of the broader economy, particularly inflation trends and the direction of monetary policy, will also play a crucial role in shaping investor sentiment in the coming months.

The August decline to ₦908 billion underscores the delicate balance facing Nigeria’s capital market — strong local investor resilience on one hand, and the need for deeper foreign participation on the other. Whether the market can bounce back in the coming months will depend largely on government reforms, central bank policies, and global economic dynamics.