Local investors drive 90% of NGX trades as foreigners sell N281bn

Nigerian investors accounted for nearly nine out of every 10 naira traded on the Nigerian Exchange Limited (NGX) in the first nine months of 2026, as foreign investors recorded net sales of ₦281.26 billion, highlighting the equities market’s growing dependence on domestic liquidity.

Local investors traded ₦13.52 trillion worth of equities between January and September, representing 89.74 per cent of total transactions of approximately ₦15.06 trillion. Foreign investors accounted for ₦1.55 trillion, or 10.26 per cent, according to the Exchange’s Domestic and Foreign Portfolio Investment Report.

The foreign share of transactions fell from 21.56 per cent in the corresponding period of 2025, while domestic participation rose from 78.44 per cent, reflecting a significant shift in the composition of trading on the Nigerian bourse.

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 during the nine-month period also surpassed the full-year figure for 2025.

The shift suggests that local investors have sustained market activity despite foreign portfolio managers taking profits and reducing their exposure to Nigerian equities.

Between March and July, foreign transactions fell from ₦288.8 billion to ₦132.6 billion monthly, while domestic trading increased from ₦1.46 trillion to ₦2.24 trillion. July, which recorded 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 the net purchases of approximately ₦219.94 billion recorded in the corresponding period of 2025. Foreign purchases totalled ₦632.35 billion, against sales of ₦913.61 billion.

Richard-Adelokiki attributed the net selling to profit-taking following the market rally, exits from long-held positions and improved foreign exchange liquidity, which made repatriation easier. Uncertainty surrounding the transition to a one-day settlement cycle, known as T+1, also affected foreign participation.

Introduced on June 1, the settlement change raised concerns among some international investors about whether transactions would require pre-funding. The uncertainty coincided with FTSE Russell’s decision to pause Nigeria’s planned market reclassification.

The Securities and Exchange Commission subsequently 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 compared with August, although investors remained net sellers, suggesting that the reclassification had yet to trigger a sustained return of international capital.

Meanwhile, pension funds have become increasingly important to domestic demand following changes to investment rules by the National Pension Commission (PenCom).

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 ₦3.96 trillion in December 2025 to ₦6.32 trillion in August 2026, representing about one-fifth of total pension assets of ₦31.80 trillion.

Kebira Aruna, Managing Director and Chief Executive Officer of GlobalView Capital Limited, also attributed increased institutional participation to the revised investment limits, which created additional room for pension fund administrators to invest in equities. Institutional transactions reached ₦8.369 trillion during the nine-month period.

However, the increase in pension fund equity holdings does not necessarily represent an equivalent amount of fresh investment. Richard-Adelokiki noted that share-price appreciation accounted for much of the earlier increase, underscoring the distinction between portfolio valuation gains and new capital inflows.

The market’s All-Share Index gained 61.43 per cent between January and September, while market capitalisation rose from ₦99.38 trillion to approximately ₦157.74 trillion.

Attention is now turning to the Dangote Petroleum Refinery initial public offering (IPO), which involves 4.1 billion shares at ₦525 each, representing approximately ₦2.15 trillion. PenCom granted pension funds a one-off waiver in May to participate in the offer.

Although IPO subscriptions are excluded from the Exchange’s secondary-market transaction figures, 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 ₦65 trillion could also make it the Exchange’s largest listed company, significantly affecting total market capitalisation and potentially influencing the All-Share Index’s performance.

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 provide a fresh indication of whether foreign investors have begun returning as net buyers following 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.