Foreign investors are increasingly withdrawing from the Nigerian Exchange, with year-to-date foreign outflows reaching N400.04 billion by October 2024, surpassing foreign inflows of N344.30 billion.
This has resulted in a net withdrawal of N55.74 billion as data from the Nigerian Exchange reveals that foreign transactions accounted for just 16.65% of total trading activity, valued at N4.47 trillion, in the first ten months of the year. In contrast, domestic transactions dominated, making up 83.35% of the total trading volume.
In October 2024, foreign transactions saw a 14.61% increase, rising from N41.41 billion in September to N47.46 billion. This included N33.31 billion in foreign inflows and N14.15 billion in outflows.
However, foreign investors’ share of the market was only 9.44%, as domestic investors took the lead, contributing 90.56% of the N502.73 billion total transactions for the month.
The ongoing depreciation of the naira has intensified concerns among foreign investors. The naira weakened by 2.31% against the dollar, falling to N1690.37/$ from N1652.25/$, adding to investor apprehension.
Meanwhile, domestic investors have continued to support the market, contributing N3.73 trillion year-to-date, with retail investors accounting for N1.91 trillion and institutional investors contributing N1.82 trillion.
Compared to the previous year, foreign transactions have improved from N291.38 billion year-to-date in October 2023 to N744.34 billion in 2024.
Despite this improvement, foreign participation remains significantly lower than that of domestic investors, raising concerns about the Nigerian Exchange’s ability to attract and retain foreign capital.
David Adonri, a broker and board member of Highcap Securities, explained that the foreign outflows indicate that investors are repatriating profits. He noted, “If outflows exceed inflows, it suggests foreign investors are taking profits back to their home countries. The volatility of the naira also impacts investor confidence, as investors prefer stable environments.”
Adonri also pointed out that while the departure of foreign investors might reduce the supply of foreign currency in the market, it is unlikely to destabilize the economy, as long as domestic participation remains strong.
