Foreign investors’ participation in Nigeria’s capital market weakened sharply in the first nine months of 2026, as domestic investors accounted for N13.52 trillion of the N15.06 trillion transactions recorded on the Nigerian Exchange Limited (NGX).

The development underscores the growing dependence of the equities market on local capital, with domestic investors accounting for 89.74 per cent of total transactions between January and September 2026, compared with 78.44 per cent in the corresponding period of 2025.

Data from the NGX Domestic and Foreign Portfolio Investment Report as of September 30, 2026, showed that total transactions rose by 76.4 per cent to N15.062 trillion from N8.538 trillion in the same period last year.

Domestic transactions increased to N13.516 trillion from N6.697 trillion, while foreign transactions declined to N1.546 trillion from N1.841 trillion, reflecting a drop in foreign investors’ share of market activity to 10.26 per cent from 21.56 per cent.

The decline in foreign participation was accompanied by persistent net selling, as foreign investors’ outflows rose while fresh capital inflows weakened.

The report showed that foreign outflows increased by 12.7 per cent to N913.61 billion in the nine months of 2026, compared with N810.39 billion in the corresponding period of 2025.

Conversely, foreign inflows fell by 38.6 per cent to N632.35 billion from N1.03 trillion, indicating that the value of capital leaving the market exceeded new foreign investments entering it.

However, foreign participation showed signs of recovery in September, with transactions rising by 208.14 per cent to N191.14 billion from N62.03 billion in August.

Foreign inflows stood at N92.52 billion, while outflows reached N98.62 billion during the month, leaving foreign investors with a net outflow of N6.1 billion.

Domestic transactions also increased by 34.58 per cent to N1.625 trillion in September, further consolidating local investors’ dominance of trading activities on the exchange.

Despite the decline in foreign participation, the Nigerian equities market recorded strong gains during the period, supported by increased domestic activity and renewed institutional investment.

The NGX All-Share Index advanced by 61.43 per cent year-to-date, rising from 155,613.03 points in January to 251,211.67 points at the end of September.

Similarly, market capitalisation increased by 64.13 per cent from N99.376 trillion to N163.105 trillion, representing an additional N63.73 trillion in market value.

The Group Managing Director and Chief Executive Officer of NGX Group, Temi Popoola, attributed the market’s positive performance to growing investor confidence.

He projected that the market’s value could reach N230 trillion by the end of the year, driven by the anticipated listing of Dangote Refinery and other large-scale public offerings.

Meanwhile, Vice Chairman of HighCap Securities, David Adonri, attributed the surge in institutional investment to the revised investment limits introduced by the National Pension Commission (PenCom) in February 2026.

The reforms increased the permissible equity allocation for Retirement Savings Account Fund I to 35 per cent, Fund II to 33 per cent, Fund III to 15 per cent and Fund VI Active to 33 per cent.

According to Adonri, the revised limits created additional room for pension fund administrators to increase their exposure to equities, helping to drive institutional transactions to N8.369 trillion during the nine-month period.

Institutional investors traded N8.369 trillion between January and September 2026, significantly above the N5.147 trillion recorded by retail investors.

“That reform freed more pension assets. Institutional doing N8.36 trillion versus N4.09 trillion last year shows pension funds are driving the market,” he said.

A senior stockbroker, Tunde Oyediran, attributed the decline in foreign participation partly to previous foreign exchange illiquidity and Nigeria’s 2023 credit rating downgrade, which he said had affected foreign investors’ appetite for local assets.

He, however, described the September rebound in foreign activity as encouraging, pointing to the increase in foreign inflows to N92.52 billion from N26.47 billion in August.

“Foreign inflow of N92.52 billion in September, up from N26.47 billion in August, shows renewed appetite. If SEC sustains reforms and corporate earnings remain strong, we may see foreign share return to 15-20 per cent by year-end,” he said.

The market’s ability to sustain its rally, analysts suggest, will depend partly on continued domestic institutional investment, stronger corporate earnings and reforms capable of restoring foreign investors’ confidence in the Nigerian economy and capital market.