Domestic Investors Outpace Foreign Investors in the Nigeria Equity Market

In 2022, the Nigeria equity market had a positive closure, gaining N5.62 trillion in market capitalization, and the NGX benchmark All-Share Index advanced by 19.98%. Domestic investors outperformed foreign investors in the equity market, shielding it from the negative effects of funds outflow from emerging markets and global headwinds. However, foreign investors’ participation, with technical analytical skills determine the true market valuation. According to the Nigerian Stock Exchange report, domestic investors’ participation in the stock market surpassed foreign investors by 83.68% in 2022 from 77.12% reported in 2021, while foreign investors’ exposure dropped to 16.32% in 2022 from 22.88% in 2021. Foreign portfolio outflow decreased by 20.6% from N229.6bn to N183.47bn, and foreign investors’ inflow dropped from N204.88bn to N195.76bn.

The report also showed that total domestic transactions increased by 28.48% from N1.10tn in 2021 to N1.41tn in 2022, while foreign transactions decreased by 41.58% from N923.67bn in 2021 to N539.94bn in 2022. Analysts attribute the decline in foreign portfolio investment to the high inflation rate in the country, and the scarcity of foreign exchange, which has made it difficult for foreign investors to repatriate their funds.