Nigeria’s capital market is entering the second half of 2026 on a stronger footing, with rising domestic participation, improved macroeconomic conditions and the prospect of renewed foreign investor interest expected to shape market performance in the months ahead.

The country’s equities market delivered a 57 percent return by the end of July 2026, while total market capitalisation climbed by N58.9 trillion to N158.3 trillion in the first seven months of the year, highlighting the strength of the market’s rally despite a sharp decline in foreign participation.

Foreign investors accounted for just 12.1 percent of NGX transaction value as of June 2026, down from 27.1 percent a year earlier, as domestic investors, particularly pension funds and other institutional investors, assumed a larger role in driving market activity.

The data and the changing composition of market participation formed part of discussions at the Coronation Media Parley, organised in collaboration with the Capital Market Correspondents Association of Nigeria (CAMCAN), where market leaders and researchers examined the outlook for the second half of 2026.

Aigbovbioise Aig-Imoukhuede, Managing Director, Coronation Asset Management, said the market’s performance reflected a structural strengthening of Nigeria’s domestic capital base rather than simply a temporary rally.

He said, domestic institutional and retail investors have become increasingly important in supporting market activity, reducing the market’s previous dependence on foreign portfolio flows.

“The rally we have witnessed is not merely a market event. It reflects a stronger domestic capital base, improving macroeconomic stability and a growing opportunity for long-term investors who position thoughtfully for the second half of the year,” he said.

The changing composition of market participation is particularly evident in foreign investor activity. Foreign investors accounted for 12.1 percent of NGX transaction value as of June 2026, down sharply from 27.1 percent a year earlier.

At the same time, domestic participation expanded significantly, with pension funds and other institutional investors taking a greater role following changes to investment thresholds.

Aig-Imoukhuede said the decline in foreign participation should not necessarily be viewed as a retreat from international capital, but rather as evidence that Nigeria’s market is developing a stronger domestic foundation.

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

Despite the impressive headline return, the equities market is entering a phase where investors will need to be more selective, according to Gbemisola Adelokiki, Head of Equities Research at Coronation Research.

She noted that the strong market performance masks significant differences among sectors and individual companies, making stock selection increasingly important in the second half of the year.

With several large-cap stocks already experiencing substantial re-rating, investors are expected to focus more closely on earnings quality, valuations, liquidity, corporate governance and the ability of companies to benefit from Nigeria’s broader economic recovery.

This suggests that further market gains may increasingly depend on company-specific fundamentals rather than broad-based buying.

The parley also identified improving foreign-exchange liquidity, a stronger reserve position and greater currency stability as factors that could improve Nigeria’s appeal to international investors.

The ongoing banking recapitalisation cycle, corporate earnings and wider reform momentum are also expected to strengthen the investment case.

A potential review of Nigeria’s classification by global index providers could provide another catalyst for foreign inflows, although speakers stressed that no outcome is guaranteed.

Aig-Imoukhuede urged investors to focus on probability rather than wait for complete certainty.

“The best opportunities are often identified before consensus recognises them,” he said.

Beyond returns and capital flows, the Coronation executive said the sustainability of Nigeria’s capital market would depend heavily on investor confidence and institutional credibility.

He argued that the market needs not only more capital but also greater transparency, stronger institutions and confidence in the quality of companies and investment managers receiving and deploying capital.

“Nigeria’s capital markets do not simply need capital. They need trust. They need transparency,” he said.

For the second half of 2026, the parley identified three broad investment principles: prioritising quality over convenience, selectivity over broad market exposure, and positioning ahead of identifiable market catalysts.

With monetary policy expected to remain broadly stable, investors may increasingly look beyond short-dated instruments towards selective opportunities in quality credit, infrastructure debt and other longer-term fixed-income assets.

Equities, meanwhile, are expected to favour companies with strong earnings momentum, sound governance, adequate liquidity and clear opportunities to benefit from increased domestic and international participation.

Infrastructure financing was also identified as a significant long-term opportunity, given Nigeria’s substantial funding requirements in areas such as energy and transport.

Closing the session, Aig-Imoukhuede described the market as being at an important inflection point.

“The first half of 2026 demonstrated the strength of Nigerian capital. The second half will test the confidence of global capital,” he said, adding that the opportunity was to build a market that is “deeper, more trusted, more liquid and more globally relevant,” he said.