Local investors drive 89.74% of NGX trades as foreigners sell N281.26bn

Nigerian investors accounted for 89.74 per cent of equity trades on the Nigerian Exchange Limited in the first nine months of 2026, trading N13.52 trillion out of total transactions of approximately N15.06 trillion. Foreign investors recorded net sales of N281.26 billion, underlining the market's growing dependence on domestic liquidity.

Foreign investors traded N1.55 trillion, or 10.26 per cent of total transactions. That was down from 21.56 per cent in the same period of 2025, while domestic participation rose from 78.44 per cent. Gbemisola Richard-Adelokiki, Head of Equities Research at Coronation Research, said foreign trading declined by about 16 per cent year-on-year while domestic trading doubled. Total transactions in the nine-month period also surpassed the full-year figure for 2025.

Foreign selloff and T+1 uncertainty

Between March and July, foreign transactions fell from N288.8 billion to N132.6 billion monthly, while domestic trading increased from N1.46 trillion to N2.24 trillion. July, which had the weakest foreign participation, was also the busiest month for local investors. Foreign investors sold more equities than they purchased in every month through September, reversing net purchases of approximately N219.94 billion in the same period of 2025. Foreign purchases totalled N632.35 billion against sales of N913.61 billion.

Richard-Adelokiki attributed the net selling to profit-taking after the market rally, exits from long-held positions and improved foreign exchange liquidity, which made repatriation easier. Uncertainty over the one-day settlement cycle, T+1, introduced on June 1, also affected foreign participation over concerns about pre-funding. The uncertainty coincided with FTSE Russell's decision to pause Nigeria's planned market reclassification. The Securities and Exchange Commission clarified on August 12 that foreign investors were not required to pre-fund transactions. FTSE Russell later confirmed Nigeria's return to its Frontier Market Index, effective September 21, after three years of exclusion. Foreign purchases rose more than threefold in September from August, although investors remained net sellers, suggesting the reclassification had yet to trigger a sustained return of international capital.

Pension funds and institutional demand

Pension funds have become increasingly important to domestic demand after changes to investment rules by the National Pension Commission. In February, PenCom raised the maximum allocation to ordinary shares from 30 per cent to 35 per cent for Retirement Savings Account Fund I and from 25 per cent to 33 per cent for Fund II. Pension fund holdings in Nigerian equities rose from N3.96 trillion in December 2025 to N6.32 trillion in August 2026, about one-fifth of total pension assets of N31.80 trillion. Kebira Aruna, Managing Director and Chief Executive Officer of GlobalView Capital Limited, attributed increased institutional participation to the revised investment limits. Institutional transactions reached N8.369 trillion during the nine-month period.

Richard-Adelokiki noted that share-price appreciation accounted for much of the earlier increase, so higher pension holdings do not necessarily represent an equivalent amount of fresh investment. The All-Share Index gained 61.43 per cent between January and September, while market capitalisation rose from N99.38 trillion to approximately N157.74 trillion.

Dangote IPO and market outlook

Attention is now on the Dangote Petroleum Refinery initial public offering, involving 4.1 billion shares at N525 each, representing approximately N2.15 trillion. PenCom granted pension funds a one-off waiver in May to participate. IPO subscriptions are excluded from secondary-market transaction figures, but investors selling existing shares to finance subscriptions could influence trading activity. Richard-Adelokiki said refunds from an oversubscribed offer could return liquidity to listed equities. At the offer price, the refinery's implied valuation of about N65 trillion could make it the Exchange's largest listed company, affecting total market capitalisation and potentially influencing the All-Share Index. The relatively small proportion of shares offered could also amplify price movements when trading begins, depending on demand and available supply.

The October portfolio investment report will show whether foreign investors have begun returning as net buyers after Nigeria's reclassification. For now, domestic investors, particularly pension funds, remain central to market activity. Sustaining the rally will depend on continued local participation, renewed foreign inflows and the ability of new listings to deepen the market beyond valuation gains.