Nigeria’s stock market rally in the first seven months of 2026 has been powered mainly by domestic investors, with foreign portfolio inflows playing a relatively limited role, the Managing Director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, has said.
The NGX All-Share Index gained 57 per cent between January and July, while the market’s total capitalisation expanded by N58.9 trillion to N158.2 trillion, placing the Nigerian equities market among the strongest performers globally in dollar terms, according to Bloomberg data.
But Aig-Imoukhuede said the impressive numbers should be viewed alongside a major shift in the composition of market participation.
Speaking on Friday at Coronation’s H1 2026 Capital Market Review and Outlook for the second half of the year, he said the rally was largely a product of stronger domestic savings, improving macroeconomic conditions and renewed confidence among local investors.
He said foreign investors had not returned to the Nigerian equities market in sufficient numbers to explain the scale of the rally.
By June, foreign investors accounted for 12.1 per cent of total transaction value on the Nigerian Exchange, compared with 27 per cent a year earlier.
The decline, however, did not necessarily mean that foreign investors were abandoning Nigeria, he said.
Aig-Imoukhuede noted that the value of foreign investors’ portfolios actually rose marginally from N1.13 trillion to N1.16 trillion in the first half of the year.
Rather, the dramatic change was the pace at which domestic investment expanded.
“What changed was the scale of domestic participation, which expanded at a far more significant pace of 129.1 per cent,” he said.
Foreign portfolio investors were nevertheless net sellers of Nigerian equities during the first six months of the year, despite the broader market’s strong performance.
According to Aig-Imoukhuede, the relative attractiveness of short-term government securities partly explains the behaviour of international investors.
With yields on short-dated Nigerian government securities approaching 20 per cent, he said, some foreign investors had a rational basis for favouring fixed-income assets over equities.
“From a pure risk-adjusted perspective, that allocation decision was understandable,” he said.
Domestic institutional investors, particularly pension funds, have meanwhile become increasingly important to the equities market following changes in investment thresholds introduced by the National Pension Commission.
Retail investors have also returned in greater numbers, adding another layer of domestic demand and helping to broaden the market’s investor base.
Aig-Imoukhuede said the stronger role of local capital should not be regarded as a weakness.
“If anything, this is a sign of market maturity. Markets become more resilient when they are supported by savings rather than speculation,” he said.
However, he warned that the impressive rally could not be sustained indefinitely without a broader improvement in market fundamentals.
The question for the second half of the year, he said, should therefore be whether the market can consolidate its gains and attract fresh international capital, rather than simply whether the 57 per cent rally can continue at the same pace.
Aig-Imoukhuede identified market classification, foreign-exchange liquidity, reserve accumulation and corporate earnings as some of the factors that could determine the return of international investors.
He said Nigeria was receiving increased attention from international index providers.
FTSE Russell is reviewing Nigeria’s position within its Frontier Market Index framework, while S&P Dow Jones Indices has placed the country on a watchlist for a possible reclassification from standalone to frontier-market status.
Although the reviews do not guarantee a change in classification, he said an upgrade could generate significant new flows, especially from passive investors whose portfolios are structured around global and regional indices.
“Global capital follows confidence, but domestic capital trades on it,” he said.
The foreign-exchange market will also remain central to the investment outlook.
According to Aig-Imoukhuede, improved FX liquidity, greater exchange-rate stability and stronger foreign reserves supported by more sustainable sources of foreign exchange could strengthen the perception of Nigeria among international investors.
He said foreign investors were likely to remain particularly sensitive to currency risk, given the potential impact of exchange-rate movements on dollar-denominated returns.
Corporate performance, he added, could provide another catalyst.
The banking sector’s recapitalisation programme, stronger earnings among leading companies and continuing economic reforms could improve the attractiveness of Nigerian equities within the frontier-market universe.
Aig-Imoukhuede also played down concerns about the market’s performance in June, when the NGX recorded its first month-on-month decline during the period under review.
He attributed the decline largely to profit-taking by domestic investors who sought to lock in some of the gains accumulated during the first half of the year.
“Domestic investors were prudently locking in gains after a historic first half,” he said.
The strong performance of the market, however, means investors may need to become more selective.
Aig-Imoukhuede said several large-cap stocks had undergone significant re-rating following the rally, making it increasingly difficult for investors to expect broad-based gains without corresponding improvements in corporate earnings.
He advised institutional investors to focus on companies with strong earnings momentum, good corporate governance, adequate liquidity and a clear ability to benefit from any renewed international participation.
On monetary policy, he said the Central Bank of Nigeria was likely to maintain its Monetary Policy Rate around its current level through the end of the year.
The CBN has retained the MPR at 26.5 per cent at its last two meetings, following a 50-basis-point reduction from 27 per cent in February.
Aig-Imoukhuede described the current stance as a deliberate, data-dependent approach designed to balance inflationary pressures with the need to support economic stability.
“At Coronation Research, our base case remains that the MPR will broadly hold at current levels through year-end. We are not forecasting a dramatic policy pivot.
“We are forecasting disciplined, data-dependent stability,” he said.
Headline inflation fell to 15.43 per cent in July, although Aig-Imoukhuede warned that the downward trajectory had not been uniform.
Food prices, he said, continued to be affected by structural issues such as supply-chain bottlenecks, transportation and logistics costs, agricultural cycles and movements in the exchange rate.
Such pressures, he noted, could not be addressed through interest-rate policy alone.
For investors, the combination of relatively high fixed-income yields and a strong equities market creates a more complicated asset-allocation environment.
Aig-Imoukhuede said quality credit, infrastructure debt and selected fixed-income instruments could offer opportunities for investors seeking attractive risk-adjusted returns while assessing whether to extend the duration of their portfolios.
Coronation, he said, would continue to focus on infrastructure financing, particularly in the energy and transport sectors, where Nigeria has substantial long-term funding requirements.
Beyond investment returns, Aig-Imoukhuede stressed the importance of building confidence in Nigeria’s capital-market institutions.
He said the ability to attract foreign capital would have limited value if the country could not provide the governance, transparency and investor protection required to retain it.
Capital, he noted, could move into and out of a market quickly, while trust takes much longer to build and can be destroyed rapidly.
He described the capital market as being at an inflection point.
The first half of 2026, he said, demonstrated that Nigeria could mobilise significant domestic capital, while the second half would test whether international investors were ready to return in greater numbers.
Despite the challenges, he said Nigeria’s investment proposition had improved compared with the beginning of the year.
Maintaining macroeconomic stability, continuing reforms and strengthening market institutions, he argued, would be critical to converting the current rally into a more durable recovery.
“The opportunity before us is not simply to deliver market returns. It is to build a capital market that is deeper, more trusted, more liquid and more globally relevant,” Aig-Imoukhuede said.
He urged regulators, asset managers and other market stakeholders to ensure that Nigeria’s financial-market infrastructure was ready to absorb new international capital if global investors renewed their interest in the country.
“Our responsibility as firms and as an industry is to ensure that when capital chooses Nigeria, it finds institutions that are prepared, markets that are credible and opportunities that are compelling,” he said.
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