In an economy where the consumer purchasing power is shrinking and corporations are preoccupied with survival over expansion, the stock market’s latest rally tells a complex story.
While there’s been an increase in retail investor participation and record inflows, a deeper analysis reveals a market driven by necessity, rather than growth.
The data paints a disturbing picture: investors are increasingly active, but their preference for short-term gains over long-term investments suggests they are merely trying to navigate a challenging economic climate rather than build lasting wealth.
In just seven months of 2025, Nigerians invested over N981 billion in stocks listed on the Nigerian Exchange (NGX), a 56 percent jump compared to the same period in 2024.
The NGX All-Share Index (ASI) has achieved a year-to-date return of +38.20 percent,
While N981 billion flowed in, over N1.007 trillion was withdrawn, representing a 57 percent increase in withdrawals compared to 2024.
This data show that Nigerians are investing more, but holding their investments for shorter periods, chasing quick gains over long-term growth.
Retail investors on the NGX were very active in July, with inflows of N235.3 billion – the highest for the year. However, this was overshadowed by even larger withdrawals, which totalled N281.2 billion. This significant outflows of N45.6 billion show that while new money is entering the market, investors are pulling out even more, making July the busiest month in terms of trading activity.
Analysts at MoneyAfrica said that this data suggest that Nigerians are waking up to the power of the stock market.
“ More participation means Nigerians are finally entering the markets. It shows financial inclusion and that stock investing is no longer for ‘the elites,’” they said.
It said that, however, higher withdrawals mean a growing short-term trading culture, posing the question, “Are Nigerians building wealth or just chasing quick wins?”
In August, the bourse saw even more profit-taking of the gains made in July.
While more Nigerians are engaging with the capital market, it’s still nowhere near its peers such as the Johannesburg Stock Exchange (JSE) in South Africa, with a market capitalisation of over $1 trillion.
Read also: Debt financing in tech rivals equity, hits $1bn
Low participation
Several factors are responsible for low participation in the capital market.
AbdulRauf Bello, portfolio manager at Cowrywise, explained that the state of Nigeria’s economy is partly responsible for the behaviour.
Nigerians have had their earnings weakened by a double-digit inflation of over 20 percent and an over 50 percent devaluation of the naira.
Four out of 10 Nigerians now live below the World Bank’s $2.15 poverty line, with the country’s citizens neck deep in misery.
Equities, as a means of raising capital, are for long-term projects, and companies only get long-term capital when there is sustainable and concrete growth in volumes (such as demand growth), experts say.
“ Demand growth happens when consumers have growing income and/or when the purchasing power is strong. Sadly, this is not so. Hence, companies do not need to raise long-term capital, so you don’t get to see many. If you look at the corporate bond market, you’d see nothing happening there. It’s all commercial papers (CPs) – working capital for businesses to simply survive,” Bello said.
This means investors might be wary of making long-term investments in a high and rising inflationary environment, so they rather stay short-term, opting for treasury bills and CPs.
According to the FMDQ Financial Markets Monthly report, the value of new CP listings in Nigeria reached N1.58 trillion during the first seven months of 2025.
This represents a 107.16 percent increase, compared to the N763.43 billion recorded in the same period in 2024. The growth is attributed to businesses using the short-term financing method to manage funding pressures.
Only a total of N129.1 billion corporate bonds were issued in the first seven months of this year, with issuances in only March, April, and May.
The irony is that equities have outperformed fixed-income over the past five years. Not only that, equities have delivered real returns over the same period.
“Barring any external shocks, the equities market is positioned to deliver even more value in the medium term, supported by expected macro stability,” Bello added.