July 5 (THEWILL) — Capital market specialists have linked the significant drop in the Nigerian equities market at the conclusion of Q2 2026 particularly to substantial sell-offs aimed at raising cash in preparation for the upcoming Dangote Refinery IPO.
Although the proposed IPO has not yet received regulatory approval, expectations surrounding what could become Africa’s largest public offering have already begun reshaping investment decisions. Market operators say institutional investors have been reducing their exposure to existing equities to create liquidity for what is expected to be one of the most sought-after investment opportunities in Nigeria’s history.
While various other factors —such as profit-taking, increasing fixed-income yields, and regulatory uncertainties in the banking sector— have been noted as contributing to the sharp decline in the equities market during the period, the determination of investors to accumulate cash ahead of the expected listing of Dangote Petroleum Refinery on the Nigerian Exchange, has dominated the conversations among capital market players.
A primary reason for this situation is that Dangote Refinery has acted as a catalyst in Nigeria’s difficult energy crisis, which has negatively influenced the economy for many years. The refinery has also provided supplies to other countries that are also eagerly awaiting the IPO. Additionally, the dividends will be paid out in dollars.
David Adorin, the Chief Executive Officer of HighCap Securities Limited, a prominent stockbroking firm and a registered dealing member of the Nigerian Exchange (NGX), confirms that the substantial asset offloading was driven by various factors. These factors include rebalancing after the earnings season, cash movements associated with the forthcoming elections, and stocks intended to capitalize on the oil market rally.
He, however, acknowledged that cash withdrawals in anticipation of the highly anticipated Initial Public Offering (IPO) of Dangote Refinery are a significant contributor to the notable sell-offs in the equities market during the second quarter of the year.
“Dangote Refinery is the big elephant in the house. A lot of investors are targeting the Dangote IPO and are moving into cash so that they can take positions early enough. Everybody knows that Dangote Refinery will pay dividend in dollars, so they are equally taking positions,” said Andorin.
The HighCap Securities boss disclosed this information during the Capital Market Correspondents Association of Nigeria (CAMCAN) Mid-Year 2026 Capital Market Review and Outlook held in Lagos on Tuesday, June 30, where he was the guest speaker. He forecasted that the equities market would gradually regain its momentum as investors react positively to stronger corporate earnings, enhanced economic indicators, and increasing confidence in Nigeria’s reform agenda.
Dr Paul Uzum, Executive Director, Halo Capital Management Limited said the Dangote Refinery IPO would be the single biggest driver of the stock market in H2 2026. According to him, because the transaction could raise about $5 billion, many investors would sell existing shares to free up funds for the IPO, thereby putting pressure on the broader market and depressing share prices in the weeks preceding the offer.
The Managing Director, Financial Derivatives Company (FDC), Bismarck Rewane, projected that the IPO would eventually lift NGX market capitalisation from about N161 trillion to about N236 trillion. However, he cautioned that “the ASI will dip before it rises,” explaining that investors would rotate funds and liquidity conditions would tighten before the benefits of the listing materialise.
Several prominent foreign leaders, international financial institutions, global energy experts and multilateral organisations have publicly praised the Dangote Refinery as one of the most significant industrial projects in Africa.
Benedict Oramah, former President of African Export-Import Bank (Afreximbank), has repeatedly described the Dangote Refinery as a transformative project for Africa. He said the refinery would strengthen Africa’s energy security; reduce dependence on imported petroleum products; promote intra-African trade and accelerate industrialisation across the continent. Afreximbank has committed billions of dollars to the project because it considers it a strategic African industrial asset.
In a detailed feature, the Financial Times concluded that Dangore Refinery has transformed Nigeria from a major importer of refined petroleum products into a significant exporter; reshaped Africa’s industrial landscape; become one of the world’s most important refining investments.
Following a remarkable increase of over 50 percent in the first half of the year, the Nigerian Exchange experienced a significant correction in June, resulting in a loss of more than N13 trillion in market capitalisation within a single month as investors took profits and adjusted their portfolios. Capital market analysts contend that this should not be interpreted as a decline in corporate fundamentals. Instead, it signifies a strategic shift of capital towards a once-in-a-lifetime investment opportunity.
The forthcoming Dangote Refinery IPO is unprecedented in the context of Nigerian listings. With an estimated valuation reaching into the tens of billions of dollars, the refinery is poised to become one of the largest companies ever listed on the NGX, thereby enhancing market capitalisation, liquidity, and foreign investor engagement.
Market forecasts indicate that between 5 and 10 percent of the company may ultimately be made available to the investing public, positioning it as one of the largest equity offerings on the continent. Institutional investors are acutely aware that meaningful participation in such an offering necessitates significant liquidity. As a result, many have been divesting profitable positions in banking, industrial, and consumer goods stocks to generate cash for the anticipated offer.
On a global scale, substantial IPOs frequently induce temporary market corrections as investors realign their portfolios. Following the completion of the listing, markets often regain their momentum as the new company expands investment opportunities, draws in fresh domestic and foreign capital, and enhances overall market depth.
As Adonri noted, while the reform-driven rally in the Nigerian capital market has entered a phase of correction, the underlying fundamentals remain intact. He expressed optimism that the market is well-positioned to recover gradually in the second half of 2026 as institutional investors complete their portfolio adjustments and economic reforms continue to gain traction, amid the anticipated Dangote Refinery IPO.
Sam Diala is a Bloomberg Certified Financial Journalist with over a decade of experience in reporting Business and Economy. He is Business Editor at THEWILL Newspaper, and believes that work, not wishes, creates wealth.
