From Bull Run to Benchmark: Can Nigeria Sustain Its Historic Capital Market Rally in 2026?
The Big Question
Nigeria enters 2026 with its capital market at a historic turning point. The issue is no longer how fast the market can rise, but whether the gains can last and translate into real economic growth.
On January 13, 2026, the NGX All-Share Index (ASI) hit an all-time high of 165,837.33 points, crowning:
• A 51.2% return in 2025 (the strongest in nearly 20 years)
• Market capitalisation growth from ₦62.8 trillion to about ₦100 trillion in just one year
This performance placed Nigeria among the best-performing equity markets globally.
What Really Drove the Bull Market?
Unlike past rallies driven by hype or commodity booms, this one was structural.
1️⃣ Macroeconomic Stabilisation
• Monetary authorities eased aggressive rate tightening in early 2025
• Lower discount rates improved equity valuations
• Investors rotated into dividend-paying and growth stocks
2️⃣ Exchange-Rate Stability
• Reduced FX volatility restored confidence
• Lowered currency translation losses for companies
• Boosted foreign portfolio investor participation
This stability was supported by:
• Rising external reserves
• Improved remittance inflows
• Expanding domestic refining capacity
⚙️ Institutional & Regulatory Reforms
Two reforms significantly strengthened market credibility:
✅ Faster Settlement Cycle
• Shift from T+2 to T+1 in December 2025
• Reduced counterparty risk
• Improved liquidity and alignment with global best practice
✅ Investment and Securities Act (ISA) 2025
• Strengthened investor protection
• Clarified regulatory oversight
• Expanded the range of tradable instruments
Together, these reforms made the rally more durable than past cycles.
Sectoral Breadth: Why This Rally Is More Resilient
A key strength of the current cycle is broad participation across sectors, not just a few big stocks.
• Consumer Goods: +129.6%
Driven by improved earnings, pricing power, and reduced FX losses
• Insurance: +65.5%
Boosted by the Insurance Reform Act mandating a 500% capital increase
• Industrial Goods: +58.9%
Supported by construction demand and balance-sheet re-rating
• Banking: +39.8%
Despite regulatory pressures and dividend restrictions
Broad-based rallies are more stable than single-sector booms.
Foreign & Retail Investors Returned
• Foreign portfolio inflows hit about ₦2 trillion in the first 11 months of 2025
• Accounted for over 20% of total trading value (highest since 2007)
• Retail participation increased, aided by digital platforms like NGX Invest
This combination deepened both market liquidity and resilience.
️ Capital Market as an Engine of the Real Economy
The sustainability of the rally depends on how well it supports capital formation, not just trading.
In 2025:
• About ₦6.49 trillion was raised via equities and fixed income
• Over ₦2.5 trillion came from banks ahead of the March 2026 recapitalisation deadline
Why this matters:
• Better-capitalised banks can lend more
• Companies rely less on short-term bank loans
• Reduced pressure on interest rates
• Stronger credit flow to businesses and households
This links capital markets directly to jobs, investment, and growth.
⚠️ Risks That Could Disrupt the Rally
Despite strong fundamentals, risks remain:
Policy Uncertainty
• Proposal to raise capital gains tax on equities from 10% to 30%
• Triggered a 5% market drop in one session
• Highlighted how sensitive markets are to abrupt policy changes
Global Headwinds
• Geopolitical tensions
• Oil prices projected around $60–$65 per barrel
• Limited fiscal space and possible higher domestic borrowing
Valuation Effects
• After a 51% rally, 2026 gains are likely to be more selective, not broad-based
What Must Happen to Sustain Gains in 2026?
The article outlines five critical conditions:
1️⃣ Policy Predictability
Transparent implementation of reforms like the Nigeria Tax Act 2025, with stakeholder engagement.
2️⃣ Macroeconomic Stability
• Inflation projected to average 12.9% in 2026
• Stable FX and gradual monetary easing could favour equities
3️⃣ Deeper Market Supply
• Potential Dangote Refinery listing
• Partial privatisation of state-owned enterprises
These could unlock trillions of naira in value.
4️⃣ Strong Regulatory Coordination
Ongoing collaboration between NGX, SEC, and other regulators to enforce governance and protect investors.
5️⃣ Technology & Social Inclusion
• Digitisation improves access and efficiency
• Linking markets to social outcomes improves legitimacy and stability
What This Means for Nigeria’s Economy
If sustained, the rally could:
• Deepen financial intermediation
• Reduce corporate dependence on debt
• Support innovation and expansion
• Strengthen Nigeria’s external position beyond oil
Crucially, this cycle is institution-driven, not commodity-driven—making it more durable, even if returns moderate.
Final Takeaway
Nigeria’s capital market is no longer just rallying—it is maturing.
The challenge for 2026 is not repeating extraordinary returns, but preserving credibility, deepening the market, and anchoring growth in institutions.
If these conditions hold, the capital market will remain a central pillar of Nigeria’s economic transformation in 2026 and beyond.
The Big Question
Nigeria enters 2026 with its capital market at a historic turning point. The issue is no longer how fast the market can rise, but whether the gains can last and translate into real economic growth.
On January 13, 2026, the NGX All-Share Index (ASI) hit an all-time high of 165,837.33 points, crowning:
• A 51.2% return in 2025 (the strongest in nearly 20 years)
• Market capitalisation growth from ₦62.8 trillion to about ₦100 trillion in just one year
This performance placed Nigeria among the best-performing equity markets globally.
What Really Drove the Bull Market?
Unlike past rallies driven by hype or commodity booms, this one was structural.
1️⃣ Macroeconomic Stabilisation
• Monetary authorities eased aggressive rate tightening in early 2025
• Lower discount rates improved equity valuations
• Investors rotated into dividend-paying and growth stocks
2️⃣ Exchange-Rate Stability
• Reduced FX volatility restored confidence
• Lowered currency translation losses for companies
• Boosted foreign portfolio investor participation
This stability was supported by:
• Rising external reserves
• Improved remittance inflows
• Expanding domestic refining capacity
⚙️ Institutional & Regulatory Reforms
Two reforms significantly strengthened market credibility:
✅ Faster Settlement Cycle
• Shift from T+2 to T+1 in December 2025
• Reduced counterparty risk
• Improved liquidity and alignment with global best practice
✅ Investment and Securities Act (ISA) 2025
• Strengthened investor protection
• Clarified regulatory oversight
• Expanded the range of tradable instruments
Together, these reforms made the rally more durable than past cycles.
Sectoral Breadth: Why This Rally Is More Resilient
A key strength of the current cycle is broad participation across sectors, not just a few big stocks.
• Consumer Goods: +129.6%
Driven by improved earnings, pricing power, and reduced FX losses
• Insurance: +65.5%
Boosted by the Insurance Reform Act mandating a 500% capital increase
• Industrial Goods: +58.9%
Supported by construction demand and balance-sheet re-rating
• Banking: +39.8%
Despite regulatory pressures and dividend restrictions
Broad-based rallies are more stable than single-sector booms.
Foreign & Retail Investors Returned
• Foreign portfolio inflows hit about ₦2 trillion in the first 11 months of 2025
• Accounted for over 20% of total trading value (highest since 2007)
• Retail participation increased, aided by digital platforms like NGX Invest
This combination deepened both market liquidity and resilience.
️ Capital Market as an Engine of the Real Economy
The sustainability of the rally depends on how well it supports capital formation, not just trading.
In 2025:
• About ₦6.49 trillion was raised via equities and fixed income
• Over ₦2.5 trillion came from banks ahead of the March 2026 recapitalisation deadline
Why this matters:
• Better-capitalised banks can lend more
• Companies rely less on short-term bank loans
• Reduced pressure on interest rates
• Stronger credit flow to businesses and households
This links capital markets directly to jobs, investment, and growth.
⚠️ Risks That Could Disrupt the Rally
Despite strong fundamentals, risks remain:
Policy Uncertainty
• Proposal to raise capital gains tax on equities from 10% to 30%
• Triggered a 5% market drop in one session
• Highlighted how sensitive markets are to abrupt policy changes
Global Headwinds
• Geopolitical tensions
• Oil prices projected around $60–$65 per barrel
• Limited fiscal space and possible higher domestic borrowing
Valuation Effects
• After a 51% rally, 2026 gains are likely to be more selective, not broad-based
What Must Happen to Sustain Gains in 2026?
The article outlines five critical conditions:
1️⃣ Policy Predictability
Transparent implementation of reforms like the Nigeria Tax Act 2025, with stakeholder engagement.
2️⃣ Macroeconomic Stability
• Inflation projected to average 12.9% in 2026
• Stable FX and gradual monetary easing could favour equities
3️⃣ Deeper Market Supply
• Potential Dangote Refinery listing
• Partial privatisation of state-owned enterprises
These could unlock trillions of naira in value.
4️⃣ Strong Regulatory Coordination
Ongoing collaboration between NGX, SEC, and other regulators to enforce governance and protect investors.
5️⃣ Technology & Social Inclusion
• Digitisation improves access and efficiency
• Linking markets to social outcomes improves legitimacy and stability
What This Means for Nigeria’s Economy
If sustained, the rally could:
• Deepen financial intermediation
• Reduce corporate dependence on debt
• Support innovation and expansion
• Strengthen Nigeria’s external position beyond oil
Crucially, this cycle is institution-driven, not commodity-driven—making it more durable, even if returns moderate.
Final Takeaway
Nigeria’s capital market is no longer just rallying—it is maturing.
The challenge for 2026 is not repeating extraordinary returns, but preserving credibility, deepening the market, and anchoring growth in institutions.
If these conditions hold, the capital market will remain a central pillar of Nigeria’s economic transformation in 2026 and beyond.