Nigeria’s equities market recorded a 57 per cent return in the first seven months of 2026, but the rally was driven predominantly by domestic capital rather than a resurgence in foreign portfolio investment, Managing Director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, has said.
Aig-Imoukhuede, speaking at the H1 2026 Capital Market Review and Outlook for Second Half of the year on Friday said the performance of the Nigerian Exchange (NGX) reflected stronger domestic participation, improving macroeconomic conditions and rising investor confidence, rather than significant foreign capital inflows.
As of the end of July, the NGX All-Share Index had gained 57 per cent, while total market capitalisation increased by N58.9tn to N158.2tn.
He said the performance placed Nigeria among the world’s strongest-performing equity markets in dollar terms, according to Bloomberg data.
However, Aig-Imoukhuede cautioned that the scale of the rally should prompt investors to assess whether the performance represented a sustainable structural recovery or a temporary market re-rating.al
“These numbers are certainly worth celebrating,” he said, noting that the rally reflected a strengthening domestic capital base, improving macroeconomic stability and growing opportunities for long-term investors.
The Coronation Asset Management executive said the changing composition of market participation was one of the most significant features of the 2026 rally.
According to him, domestic investors have become the dominant force behind the market’s performance, even as foreign participation has declined.
By June 2026, foreign investors accounted for 12.1 per cent of total NGX transaction value, down from 27 per cent a year earlier.
Aig-Imoukhuede, however, said the decline in foreign participation should not be interpreted as a complete withdrawal of international investors from Nigeria.
He noted that the value of foreign investors’ portfolios increased modestly from N1.13tn to N1.16tn during the first half of the year, suggesting that the major shift was in the relative scale of domestic investment activity.
“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 also net sellers of Nigerian equities during the first six months of the year, despite the broader market rally.
Aig-Imoukhuede attributed part of the foreign investors’ positioning to the attractiveness of short-dated Nigerian government securities, which offered yields close to 20 per cent.
“From a pure risk-adjusted perspective, that allocation decision was understandable,” he said.
He identified domestic institutional investors, particularly pension funds, as important contributors to the equities rally following changes to investment thresholds by the National Pension Commission (PenCom).
The resurgence in domestic retail participation also contributed significantly to the market’s performance, reinforcing what he described as a structural shift in the investor base.
Aig-Imoukhuede rejected concerns that increased domestic participation represented a weakness for the market, arguing that a market supported by domestic savings could become more resilient over time.
“If anything, this is a sign of market maturity. Markets become more resilient when they are supported by savings rather than speculation,” he said.
Despite the strong performance, he acknowledged that the rally had been relatively narrow and that the market would need broader participation and stronger fundamentals to sustain the gains.
He said the key question for the second half of 2026 was therefore not whether the rally would simply continue, but whether Nigeria could attract a new wave of international capital.
According to him, the second half of the year could represent a potential re-entry window for foreign investors as conditions around market classification, foreign-exchange liquidity, reserves and corporate earnings continue to improve.
Aig-Imoukhuede said international index providers were increasingly paying attention to Nigeria’s market.
He noted that FTSE Russell was reviewing Nigeria’s position within its Frontier Market Index framework, while S&P Dow Jones Indices had placed Nigeria on a watchlist for possible reclassification from standalone to frontier-market status.
Although neither outcome was guaranteed, he said any change in Nigeria’s classification could have significant implications for international capital flows, particularly passive investment.
“Global capital follows confidence, but domestic capital trades on it,” he said.
He also pointed to improvements in Nigeria’s foreign-exchange market as a factor that could strengthen the investment case for foreign investors.
According to him, improved FX liquidity, a stronger naira and reserve accumulation supported by more sustainable sources of foreign-exchange inflows were important indicators of Nigeria’s external resilience.
He said foreign investors would be particularly interested in the sustainability of exchange-rate stability because currency risk remains a major consideration when assessing Nigerian assets.
Corporate earnings and ongoing economic reforms were also identified as potential catalysts for renewed foreign investment.
Aig-Imoukhuede said the banking sector’s recapitalisation cycle, stronger corporate performance and broader economic reforms were improving the long-term investment proposition for Nigeria within the frontier-market universe.
He said the market’s decline in June, which marked the first month of sequential decline during the period under review, should not necessarily be viewed as evidence of weakening investor confidence.
Rather, he attributed the decline largely to profit-taking by domestic investors following the exceptional gains recorded in the first half of the year.
“Domestic investors were prudently locking in gains after a historic first half,” he said.
Aig-Imoukhuede maintained that the structural case for foreign investors to return to Nigeria was stronger than it had been at the beginning of 2026, although he stressed that investors would become increasingly selective.
He said a market that had gained more than 55 per cent and experienced significant re-rating in several large-cap stocks was unlikely to continue rewarding indiscriminate investment.
He therefore urged institutional investors to focus on companies with strong earnings momentum, sound corporate governance, adequate liquidity and clear prospects of benefiting from renewed international participation.
Looking ahead, Aig-Imoukhuede outlined three broad principles for capital allocation during the remainder of the year, particularly as monetary policy remains relatively tight and investors reassess the attractiveness of fixed-income and equities markets.
With the Central Bank of Nigeria (CBN) expected to maintain its Monetary Policy Rate broadly around current levels, he said the short end of the yield curve could become increasingly crowded as investors continue to seek attractive risk-adjusted returns.
The CBN has maintained the MPR at 26.5 per cent for two consecutive meetings following a 50-basis-point reduction from 27 per cent in February.
Aig-Imoukhuede described the decision to maintain the rate as deliberate and data-dependent, rather than indecisive, citing global uncertainty, geopolitical tensions and volatility in domestic inflation.
Headline inflation stood at 15.43 per cent in July, although he noted that the decline in inflation had not been linear.
He stressed that food-price pressures remained influenced by structural factors such as supply-chain constraints, logistics, agricultural cycles and exchange-rate movements, which cannot be addressed solely through monetary policy.
“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.
According to him, monetary-policy stability may not generate significant headlines, but it creates an environment in which long-term capital can be deployed with greater confidence.
He also identified opportunities in quality credit, infrastructure debt and selected fixed-income instruments as investors consider extending duration in response to changing market conditions.
He said Coronation remained committed to infrastructure financing, particularly in the energy and transport sectors, where Nigeria’s long-term capital requirements remain substantial.
Beyond the equities market, Aig-Imoukhuede said Nigeria’s capital market had a broader responsibility to strengthen trust, transparency and institutional credibility.
He argued that attracting more capital would not be sufficient unless the market also developed institutions capable of providing the transparency, governance and investor protection required to retain that capital.
He said capital could enter and exit a market quickly, while investor trust takes years to build and can be lost in moments.
Aig-Imoukhuede described Nigeria’s capital market as being at an inflection point, with the first half of 2026 demonstrating the growing strength of domestic capital and the second half likely to test whether international investors are prepared to return.
He expressed optimism that Nigeria was better positioned than in previous years to attract both domestic and foreign investment, provided the country sustained reforms, strengthened market institutions and maintained macroeconomic stability.
“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,” he said.
He urged asset managers, market operators, regulators and other stakeholders to ensure that Nigeria’s market infrastructure and institutions were prepared to absorb renewed international investment.
“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.
Aig-Imoukhuede’s comments come as Coronation continues to position itself around long-term capital allocation and investment opportunities in Nigeria and across Africa.