Market News

By : Helen Oji

•Operators attribute renewed confidence to bank recapitalisation For the first time in 10 years, foreign investors have regained dominance on the Nigerian Exchange Limited (NGX), breaking a decade of leadership by domestic investors, data obtained from the exchange revealed.

As of March, foreign activities totalled N700 billion, approximately 60 per cent of the total transactions. The total transactions in the month were N1.115 trillion.

Local participation, on the other hand, stood at N415.6 billion or 40 per cent of the market turnover for the month. As of January 2025, domestic investors were responsible for approximately 76 per cent of the total transaction value, significantly outperforming foreign investors.

Also, every month, total foreign transactions increased by 1,541 per cent, from N42.65 billion to N699.89 billion in March 2025.

In contrast, total domestic transactions fell by 10.98 per cent from N466.82 billion to N415.62 billion.

Operators argued that the recent uptick in foreign portfolio investment (FPI) reflects the growing confidence among international investors, driven by a combination of macroeconomic improvements and structural reforms.

According to them, one of the primary drivers of the renewed interest is the ongoing banking sector recapitalisation, which foreign investors perceive as a catalyst for consolidation and long-term growth.

The operators believed that as banks restructure and strengthen their capital base, investor expectations for higher returns and improved governance would rise, making the sector particularly attractive.

Another contributing factor is the recovery of multinational companies from recent foreign exchange (FX) losses, which had previously dampened investor appetite.

With the recent stability in the FX market, many listed firms in the manufacturing sector have returned to profitability after incurring significant FX losses that wiped out their shareholders’ funds, pushing them into negative positions in 2023.

With the improvements in Nigeria’s FX management and greater clarity around repatriation of earnings, these companies are beginning to show stronger balance sheets and profitability. This recovery is improving overall market sentiment and encouraging reinvestment from international stakeholders.Also, Nigeria’s equities market has demonstrated resilience by outperforming inflation for two consecutive years.

Research Analyst at Cowry Asset Management Limited, Charles Abuede, said the Nigerian equities currently trade at a price-to-earnings (P/E) ratio below 10x, making them significantly undervalued when compared to other African markets.

According to Abuede, this valuation gap presents an attractive entry point for foreign investors looking to gain exposure to growth at a discount.

He also noted that improved conditions for profit-taking, dividend repatriation, and currency stability are enhancing Nigeria’s investment proposition. Moreover, the market’s diversification benefits continue to outweigh its perceived risks, especially for investors looking to balance portfolios across emerging and frontier markets.

Vice President of Highcap Securities, David Adonri, attributed part of the renewed foreign interest to Nigeria’s ongoing banking sector recapitalisation exercise.

According to him, the exercise is expected to strengthen financial institutions and is currently creating opportunities for investors to take positions in a sector poised for consolidation and long-term growth.

Adonri also hinged the renewed foreigners’ confidence on the recovery of multinational companies that had previously suffered from foreign exchange (FX) volatility.

He added that the Nigerian stock market has outpaced inflation for two consecutive years, which enhances its appeal to yield-seeking investors.

Also contributing, a stockbroker, Tunde Oyediran, described bank consolidation as a major magnet for foreign capital.

According to Oyediran, the ongoing reforms are being interpreted as a signal of long-term structural strength, prompting large-volume transactions, especially in banking equities.

He pointed out that this uptick in activity is not isolated to financial services alone but is expected to positively influence other sectors of the market, as foreign investors broaden their exposure to benefit from Nigeria’s cyclical rebound.