By Barnabas Esiet.
The Nigerian capital market is at an inflection point, with stronger domestic participation, improving macroeconomic stability and rising investor confidence creating opportunities for long-term capital, the Managing Director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, has said.
Aig-Imoukhuede, speaking during a market outlook session with the Capital Market Correspondents Association of Nigeria (CAMCAN), said the Nigerian equities market’s performance in the first seven months of 2026 had been remarkable, with the market delivering a 57 per cent return and total market capitalisation expanding by ₦58.9 trillion to ₦158.2 trillion.
He, however, said the strong performance had raised a critical question for investors and policymakers: whether the rally represented a sustainable market trend or merely a temporary surge.
According to him, the rally reflected three major developments — a stronger domestic capital base, improving macroeconomic stability and increased opportunities for investors willing to take a long-term position in the market.
Aig-Imoukhuede said the macroeconomic environment had improved, although it was not yet strong enough to be regarded as a full launch pad for accelerated growth.
He noted that the Central Bank of Nigeria had retained the Monetary Policy Rate at 26.5 per cent for two consecutive meetings following a 50-basis-point reduction from 27 per cent in February.
He said the decision reflected the CBN’s cautious approach amid global uncertainty, geopolitical tensions and volatility in Nigeria’s inflation trajectory.
Headline inflation, he noted, eased to 15.43 per cent in July, although food prices remained volatile due to supply-chain constraints, logistics, agricultural cycles and exchange-rate movements.
Aig-Imoukhuede said Coronation’s base case was for the MPR to remain broadly around current levels through the end of the year, rather than anticipating a major monetary-policy pivot.
“Stability may not generate headlines, but it creates the conditions under which long-term capital can be deployed with greater confidence,” he said.
Domestic capital drives equities rally
The Coronation Asset Management MD said the strength of the equities rally could not be fully understood without examining the source of the capital driving the market.
He said Nigerian equities had rallied primarily on the strength of domestic capital rather than foreign investment.
According to him, foreign investors accounted for only 12.1 per cent of NGX transaction value by June 2026, compared with 27 per cent a year earlier.
He stressed, however, that the decline in foreign participation did not mean foreign investors had abandoned Nigeria, noting that the value of foreign portfolios increased modestly from ₦1.13 trillion to ₦1.16 trillion during the first half of the year.
The major change, he said, was the rapid expansion of domestic participation, which grew by 129.1 per cent.
Aig-Imoukhuede said foreign portfolio investors were net sellers of Nigerian equities during the first six months of the year even as the market rallied.
He explained that some of the foreign capital moved into short-dated government securities offering yields close to 20 per cent, an allocation he described as understandable from a risk-adjusted investment perspective.
He identified domestic institutional investors, particularly pension funds following revisions to investment thresholds by the National Pension Commission, as major drivers of the equities rally, alongside renewed participation by domestic retail investors.
According to him, the development represents a positive sign of market maturity because markets are more resilient when supported by savings rather than speculation.
Foreign investors could return
Aig-Imoukhuede said conditions were gradually improving for renewed foreign participation in the Nigerian market.
He cited the attention of global index providers, including FTSE Russell and S&P Dow Jones Indices, to Nigeria’s market classification as one potential catalyst.
While stressing that no reclassification outcome was guaranteed, he said any positive development could have significant implications for Nigeria’s ability to attract international and passive capital flows.
He also pointed to improved foreign-exchange liquidity, a stronger naira and increased reserve accumulation as indications of improving external resilience.
“Serious investors pay close attention to these indicators because they provide insight into the durability of exchange-rate stability and external resilience,” he said.
Investors should focus on quality
Aig-Imoukhuede advised investors to prioritise quality assets rather than simply chase returns, warning that the short end of the fixed-income market could become increasingly crowded as investors seek opportunities in short-dated government securities.
He said investors should selectively consider quality credits, infrastructure debt and other carefully chosen fixed-income exposures.
He also urged investors to focus on companies with strong earnings momentum, sound corporate governance, adequate liquidity and clear prospects of benefiting from renewed foreign participation.
His third recommendation was for investors to position ahead of potential market catalysts rather than wait until such developments had become fully priced into the market.
He said potential reclassification by global index providers could trigger significant international attention and passive capital flows, adding that companies with strong liquidity, free floats, governance and disclosure standards would be best positioned to benefit.
“The best opportunities are often identified before consensus recognises them,” he said.
‘Nigeria’s capital markets need trust’
Beyond market returns, Aig-Imoukhuede said the development of Nigeria’s capital market required stronger institutions, transparency and trust.
“Nigeria’s capital markets do not simply need capital. They need trust. They need transparency, and they need institutions willing to be judged by the quality of their thinking, not merely the size of their returns,” he said.
He called on asset managers, market operators, regulators and other participants to collectively uphold higher standards as the market continues to develop.
“Capital is mobile. Trust is not,” he said, stressing that while capital could enter and leave a market quickly, trust takes years to build and can be lost in moments.
Aig-Imoukhuede said the first half of 2026 had demonstrated the strength of domestic capital, while the second half would test the confidence of global investors.
He expressed optimism that Nigeria was better positioned than it had been in recent years to attract both domestic and international capital.
He said the ultimate objective should be to build a capital market that is deeper, more trusted, more liquid and more globally relevant, rather than simply pursuing short-term market returns.
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