- As Foreign Flows Dip
BY BONNY AMADI
According to the NGX polled trading figures from market operators on their Domestic and Foreign Portfolio Investment (FPI) flows, the Nigerian equities market opened 2026 on a significantly stronger footing in terms of trading activity.
The strong trading activity marked a notable shift in the structure of participation.
Total transactions in Q1 2026 rose sharply to N4.15 trillion, compared to N2.23 trillion in Q1 2025, representing an 86% year-on-year increase.
This points to improved liquidity conditions and heightened market activity overall. However, this expansion has been driven largely by domestic investors, whose dominance has become more pronounced.
Domestic participation accounted for 86.9% of total transactions in Q1 2026, up from 63.5% in Q1 2025, while foreign participation declined significantly from 36.5% to just 13.1% over the same period.
In absolute terms, foreign transactions fell from N814 billion in Q1 2025 to N542 billion in Q1 2026, highlighting continued caution among offshore investors. In contrast, domestic flows surged from N1.42 trillion to N3.61 trillion, reinforcing the view that the market’s current strength is being powered internally.
This trend reflects lingering concerns among foreign investors around foreign exchange stability, repatriation risks, and broader macroeconomic uncertainty, despite the clear improvement in trading volumes.
As a result, while the market is more active and liquid, it is less globally integrated than it was a year ago.
A closer look at domestic participation shows that institutional investors are leading this expansion. Of the N3.61 trillion recorded in domestic transactions, institutional investors accounted for N2.16 trillion, representing roughly 60%, while retail investors contributed N1.45 trillion.
This indicates that the market’s growth is being driven more by long-term, strategic capital rather than short-term speculative flows, which typically supports greater stability.
On a monthly basis, trading activity gathered momentum through the quarter, with March emerging as a key turning point. Total transactions increased from N0.86 trillion in January to N1.54 trillion in February, before rising further to N1.74 trillion in March. This represents a 13.1% increase from February and a substantial 56.4% rise compared to March 2025, underscoring the broader expansion in market participation.
The most notable development in March was the rebound in foreign participation. Foreign transactions rose from N114 billion in January, representing 13.2% of total activity, to N139 billion in February (9.0%), before surging to N289 billion in March, accounting for 16.6% of total transactions.
This marks a 107.7% increase from February, suggesting the first meaningful sign of foreign re-entry into the market in 2026.
The uptick appears to reflect tactical positioning by offshore investors, likely driven by attractive equity valuations, the search for yield in a high-interest-rate environment, and a degree of comfort with prevailing foreign exchange levels.
Nonetheless, foreign participation remains structurally low com- pared to the previous year.
Domestic investors continued to anchor market activity in March, with transactions rising modestly from N1.40 trillion in February to N1.46 trillion, a 3.7% increase.
However, the pace of growth has moderated compared to earlier in the quarter.
Within this, institutional activity increased by 6.95%, while retail participation declined slightly by 1.3% and suggests that institutional investors are still actively building positions with a longer-term view, while retail investors may be taking profits or adopting a more cautious stance following recent market gains.
Experts at Cowry Assets were of the opinion that the market is deepening and becoming more liquid, but remains heavily reliant on domestic capital. While foreign investors are yet to fully return, the sharp rebound in March indicates early signs of selective re-engagement.
The increasing dominance of institutional investors also suggests a more stable market structure, with less susceptibility to sharp volatility typically associated with retail-driven cycles.
Despite the strong growth in transaction volumes, the relatively weak foreign presence highlights a market that is expanding but has not yet fully regained external confidence.
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