NGX Gains 57% in Seven Months amid FPI Decline

Nigeria’s equities market gained 57 per cent in the first seven months of 2026, driven largely by domestic capital rather than a resurgence in foreign portfolio investment, Coronation Asset Management has said.

The Managing Director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, disclosed this during the firm’s H1 2026 Capital Market Review and Outlook presentation held with members of the Capital Market Correspondents Association of Nigeria.

As of July 31, the Nigerian Exchange All-Share Index had risen 57 per cent, while total market capitalisation increased by N58.9trn to N158.2trn.

According to Bloomberg data cited by Aig-Imoukhuede, the performance placed Nigeria among the strongest-performing equity markets globally in dollar terms.

However, he cautioned investors against viewing the sharp gains as automatic evidence of a sustained structural recovery, saying the rally could still represent a temporary market re-rating.

“These numbers are certainly worth celebrating,” Aig-Imoukhuede said, noting that the performance reflected a stronger domestic capital base, improving macroeconomic conditions and increased investor confidence.

Domestic Capital Drives NGX Rally

A key feature of the 2026 rally has been the changing composition of market participation, with domestic investors emerging as the dominant source of liquidity while foreign participation declined.

By June, foreign investors accounted for 12.1 per cent of total NGX transaction value, compared with 27 per cent in the corresponding period of 2025.

Aig-Imoukhuede, however, said the decline did not amount to a complete withdrawal of foreign investors from the Nigerian market.

He said the nominal value of foreign investors’ portfolios increased modestly from N1.13tn to N1.16trn in the first half of the year.

“What changed was the scale of domestic participation, which expanded at a far more significant pace of 129.1 per cent,” he said.

He attributed part of foreign investors’ cautious positioning to the attractiveness of short-dated Nigerian government securities, which offered yields close to 20 per cent.

From a risk-adjusted perspective, the yields on fixed-income instruments provided foreign investors with an alternative to equities amid prevailing market and economic uncertainties.

Pension Funds, Retail Investors Support Market

Aig-Imoukhuede identified domestic institutional investors, particularly pension funds, as important contributors to the equities rally.

He linked increased pension fund participation to updated investment threshold guidelines issued by the National Pension Commission.

The rise in domestic retail participation also contributed to the broader shift in the composition of the market.

According to the Coronation executive, the growing role of domestic savings could strengthen the resilience of Nigeria’s capital market over the longer term.

“Markets become more resilient when they are supported by savings rather than speculation,” he said.

Despite the strong performance, he warned that the rally remained relatively narrow and would require broader participation and stronger corporate fundamentals to sustain the gains in the second half of the year.

Foreign Investors Could Return

Aig-Imoukhuede said developments in Nigeria’s market classification could provide a catalyst for renewed international participation.

He noted that FTSE Russell was reviewing Nigeria’s position within its Frontier Market Index, while S&P Dow Jones Indices had placed Nigeria on a watchlist for possible reclassification from standalone to frontier-market status.

He also identified improved foreign-exchange liquidity, stronger reserves, bank recapitalisation and exchange-rate stability as factors that could influence the return of international capital.

“Global capital follows confidence, but domestic capital trades on it,” he said.

The June pullback in the equities market, according to Aig-Imoukhuede, was largely attributable to profit-taking rather than a deterioration in investor confidence.

He said domestic investors were locking in gains after the market’s strong first-half performance.

Coronation Sees MPR At 26.5% Through Year-End

On monetary policy, Coronation Research expects the Central Bank of Nigeria to maintain the Monetary Policy Rate at around 26.5 per cent through the end of 2026.

The CBN has maintained the benchmark rate at 26.5 per cent after cutting it by 50 basis points from 27 per cent in February.

“At Coronation Research, our base case remains that the MPR will broadly hold at current levels through year-end. We are forecasting disciplined, data-dependent stability,” Aig-Imoukhuede said.

The expected stability in monetary policy could provide greater certainty for investors as the equities market enters the second half of the year.

However, the firm stressed the need for stronger market transparency, corporate governance and institutional credibility to sustain investor confidence and improve the competitiveness of Nigeria’s capital market.

With domestic participation now providing much of the momentum behind the NGX rally, the sustainability of the gains will depend on whether stronger local savings, corporate earnings and macroeconomic stability can be maintained while Nigeria works to attract a fresh wave of foreign capital.