Domestic Investors Slash Stock Trades by N932bn in August

Domestic investors on the Nigerian Exchange Limited (NGX) reduced their trades by a massive N932bn in August, dragging down the overall value of transactions on the local bourse.

According to the Nigerian Exchange’s Domestic and Foreign Portfolio Investment Report for August 2025, total domestic participation fell by 55.87 per cent, from N1.669tn in July to N736.57bn in August.

The sharp decline was largely attributed to the absence of block trades, which had significantly boosted volumes in the previous month.

The fall in domestic activity also weighed on the broader market. Overall transactions dropped 49.95 per cent month-on-month, from N1.815tn in July to N908.38bn in August.

Despite the steep drop, activity in August was still much stronger than the same period last year. Compared with N379.52bn in August 2024, the August 2025 figure represented a 139.35 per cent increase.

A breakdown of the August report showed that institutional investors were the main drivers of the slump. Their trades plunged 65.91 per cent, sliding from N1.152tn in July to N392.9bn in August.

Retail investors also pulled back but less drastically, with transactions declining 33.46 per cent, from N516.5bn in July to N343.67bn in August.

Institutional players still accounted for the majority of the market at 53 per cent, compared with 47 per cent for retail.

In contrast, foreign investors stepped up activity as their transactions rose 17.72 per cent, from N145.95bn in July to N171.81bn in August. Inflows reached N95.14bn, while outflows stood at N76.68bn, indicating relatively balanced sentiment.

As a result, foreign activity made up 18.91 per cent of total trades in August, up from 8.04 per cent in July. Domestic investors still dominated with 81.09 per cent of transactions.

Between January and August 2025, domestic investors traded N5.463tn, compared with N1.453tn by foreign investors, showing locals accounted for 79 per cent of activity in the first eight months of the year.

Both domestic and foreign participation also rose strongly year-on-year. Domestic transactions nearly doubled from N2.82tn in the same period of 2024, while foreign trades more than doubled from N655.5bn.

The longer-term trend shows that domestic investors continue to provide the bulk of market liquidity. Over the past 18 years, domestic transactions have risen 33.15 per cent, from N3.556tn in 2007 to N4.735tn in 2024. Foreign transactions grew 38.31 per cent, from N616bn in 2007 to N852bn in 2024.

Analysts said the sharp August decline was not a sign of weakening fundamentals but rather the effect of an unusually large block trade in July that inflated volumes. Block trades typically involve the purchase or sale of a substantial number of shares in one transaction, often by institutions.

The report also highlighted the impact of exchange rate movements. The naira traded at N1,533.55/$ at the end of July 2025 and slightly strengthened to N1,531.57/$ by the end of August. This relative stability supported foreign flows, though domestic sentiment remained the key driver of overall volumes.

Market observers noted that while foreign participation has increased, the bourse still depends heavily on the decisions of a few large local investors whose trades can swing volumes by hundreds of billions of naira each month.