Kayode Tokede
The Nigerian equities market depreciated by N2.5 trillion in August 2026, influenced by the revised Open Market Operations (OMO) framework by the Central Bank of Nigeria (CBN). The revised policy allows individuals, corporates and non-bank financial institutions to participate in the market.
Analysis of trading numbers showed that the market capitalisation of listed stocks on the Nigerian Exchange Limited (NGX) closed for trading at N155.8266 trillion, a decline of N2.5trillion or 1.6 per cent when compared with the N158.326 trillion it closed for trading July 31, 2026.
However, the stock market rebounded between August 27 and 28, gaining N1.67 trillion as Nigeria returned to FTSE Russell’s Frontier Market.
FTSE Russell confirmed on August 27, 2026, that Nigeria’s reclassification from Unclassified to Frontier Market status will proceed from the market open on Monday, 21 September 2026. The confirmation follows an additional assessment of Nigeria’s transition from a T+2 to T+1 settlement cycle, after market participants raised concerns that the change could effectively result in a de facto prefunding requirement for international institutional investors.
Furthermore, the NGX All-Share Index (ASI) stood at 241,298.47 basis points as of August 28, 2026, about 3,985.21 basis points or 1.6 per cent decline from 245,283.68 basis points it opened for trading in the month under review. The NGX ASI in its Year till Date closed August 28, 2026 at 55.06 per cent.
The Acting Director, Financial Markets Department of the CBN, Mr. Okey Umeano, had announced in a circular dated August 12, 2026, that participation in both the primary and secondary OMO markets would be open to all eligible investors through Deposit Money Banks (DMBs).
“OMO participation (primary and secondary markets) shall be open to all eligible investors through Deposit Money Banks (DMBs). Eligible investors include individuals, corporates and non-bank financial institutions. DMBs shall continue to submit bids and settle transactions on behalf of their customers,” the circular stated.
Under the previous framework, access to the CBN’s Discount Window was restricted for banks that participated in the Nigerian Foreign Exchange Market (NFEM) or purchased government securities at primary auctions. The restriction on accessing the Discount Window on the same day as participating in OMO operations also applied.
The circular removes the restrictions, allowing banks to participate in these markets without losing same day access to the CBN’s liquidity facility. However, the restriction on using the Discount Window and participating in OMO auctions on the same day remains in place.
With OMO bills now accessible to individuals and other eligible investors through banks, rather than being largely restricted to institutional market participants, analysts believe the policy could divert some funds from the Nigerian stock market to the fixed-income market, particularly given the attractive yields on offer.
The revised OMO framework coincided with the apex bank’s aggressive liquidity management.
On August 13, the CBN offered N600 billion worth of OMO bills, with stop rates reaching 20.39 per cent. The 103-day and 138-day instruments attracted total subscriptions of N4.9 trillion, while successful bids amounted to N2.6 trillion.
Analysts tracking developments in the fixed-income market expect elevated OMO yields to gradually filter through to deposit rates as banks compete to retain funds that could otherwise migrate to higher-yielding instruments. Over time, the development could also encourage a gradual convergence between Treasury Bill and OMO yields, narrowing the roughly 400-basis-point gap currently separating instruments with comparable tenors.
The latest auction formed part of one of the CBN’s most aggressive liquidity sterilisation exercises this year, coming shortly after the apex bank injected a net N5.21 trillion into the banking system, including a single N2.48 trillion OMO repayment on August 11.
It also followed a combined N4.7 trillion mopped up through OMO auctions on August 3 and 4, while more than N7 trillion was absorbed through similar auctions in July alone.
The sustained demand recorded at successive auctions, despite the substantial liquidity already withdrawn from the financial system, suggests that liquidity conditions remain robust enough to support continued participation in OMO instruments.
With OMO stop rates at about 20.4 per cent, significantly above yields on comparable Treasury Bills, the instrument has emerged as an increasingly attractive risk-free investment option.
Analysts noted that the CBN’s revised OMO framework may further temper participation, keeping market sentiment cautious in the coming weeks.
They noted that the persistent profit-taking and portfolio reallocation toward higher-yielding fixed-income assets such as commercial papers, bonds, and money market funds continued to weigh heavily on overall sentiment on the equities market.
On market outlook, Cowry Assets Management Limited said, “the Nigerian equities market is expected to remain volatile and cautious in the short term amid continued profit-taking. However, the medium-term outlook remains cautiously positive, supported by strong earnings and attractive valuations, with investors likely to favour fundamentally sound stocks.”
Looking ahead, Cordros Securities Limited said, “we expect market sentiment to remain cautious in the absence of clear near-term catalysts. In addition, the CBN’s revised OMO framework could temper market participation, as attractive short-term fixed-income yields may continue to compete with equities for investor flows.”