KAYODE OGUNWALE 
After a historic 51 per cent rally in 2025, Nigeria’s stock market is entering a more demanding phase in 2026. In this interview, UCHE UWALEKE, Professor of Capital Market at Nasarawa State University, Keffi, and President of the Capital Market Academics of Nigeria, explains why fundamentals, reforms and careful stock selection will matter more than speculation as investors navigate a volatile but opportunity-filled market. KAYODE OGUNWALE reports
The Nigerian stock market closed 2025 on an exceptional note, recording one of its strongest rallies in decades. How significant was this performance in historical and global context?
The performance of the Nigerian stock market in 2025 was truly historic, both from a domestic and global perspective. A full-year return of 51.19 per cent on the Nigerian Exchange All-Share Index (ASI) is not something we see often.
In fact, this is the strongest performance in nearly two decades and places 2025 alongside exceptional years such as 2020, 2013, 2017 and 2023. What makes 2025 particularly remarkable is that it occurred against a backdrop of global uncertainty, lingering geopolitical tensions and relatively tight financial conditions for much of the year.
Globally, most emerging and frontier markets struggled to generate returns beyond the low-to-mid teens. Nigeria, therefore, stood out clearly as one of the best-performing equity markets worldwide.
The rally also pushed market capitalization close to the N100 trillion mark, which is not just a psychological milestone but a signal of increasing market depth, liquidity and investor confidence.
It suggests that Nigeria’s capital market is gradually maturing and becoming more resilient, despite long-standing structural challenges.
Beyond the headline numbers, what stood out to you about the nature and composition of the 2025 rally?
One of the most encouraging aspects of the 2025 rally was its broad-based nature. This was not a narrow rally driven by just one or two large-cap stocks; rather, it reflected strong participation across multiple sectors and impressive stock-specific performances. The consumer goods sector, for instance, was the standout performer, delivering a remarkable return of about 129.6 per cent.
This was driven by several factors: improved corporate earnings, easing foreign exchange losses following improved currency stability, and renewed investor confidence in companies’ pricing power amid moderating inflation. Stocks such as Guinness Nigeria, Vitafoam, Champion Breweries, Honeywell Flour Mills and NASCON recorded extraordinary gains, while sector heavyweights like Nigerian Breweries, Nestlé and Unilever also posted strong advances.
The insurance sector also surprised many observers, returning about 65.6 per cent. This was largely driven by renewed optimism following the signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and expectations around recapitalization.
Similarly, the industrial goods sector gained close to 59 per cent, supported by strong construction demand and exceptional stock-specific re-ratings, particularly Beta Glass, which delivered returns of over 470 per cent. Even the banking sector, despite regulatory headwinds, managed to post a respectable 39.8 per cent return.
You mentioned regulatory headwinds in the banking sector. How did banks still manage to perform strongly in 2025?
The banking sector’s performance in 2025 is a classic example of investors looking beyond short-term constraints to focus on long-term structural positives. While the Central Bank of Nigeria’s forbearance directive led to dividend suspensions for some banks in mid-2025, the market largely discounted this as a temporary measure.
What really supported banking stocks was the ongoing recapitalization exercise. By the end of 2025, about 16 banks had raised over N2.5 trillion ahead of the March 2026 deadline. This injected fresh capital into the system, strengthened balance sheets and improved the long-term growth outlook for the sector.
Investors recognized that a better-capitalized banking system is essential for funding economic growth, supporting large-ticket transactions and enhancing financial stability. As a result, banking stocks remained attractive, even in the face of shortterm regulatory challenges.
How did global and domestic macroeconomic conditions shape market performance in 2025?
The macroeconomic backdrop played a critical role. Globally, 2025 was characterized by moderate economic growth of about 3.2 per cent, easing inflation and a gradual shift towards less restrictive monetary policies in advanced economies. Although geopolitical tensions, especially the Russia–Ukraine conflict,
Even the banking sector, despite regulatory headwinds, managed to post a respectable 39.8 per cent return
persisted, global financial conditions were less tight than in 2024, which supported risk appetite across emerging and frontier markets. Domestically, Nigeria experienced improving macroeconomic stability. GDP growth strengthened to about 3.9 per cent, inflation moderated to around 14 per cent following CPI rebasing and tight monetary policy, and foreign exchange stability improved.
This was supported by higher capital inflows, expanding domestic refining capacity and improved balance of payments dynamics. External reserves rose to about US$45 billion, providing over 10 months of import cover. Notably, foreign portfolio inflows surged by more than 800 per cent to approximately N1.12 trillion, reflecting renewed international confidence in Nigerian assets.
Turning to 2026, what are the major global risks that could shape market outcomes?
The most significant global risk remains geopolitical tension, particularly the unresolved Russia–Ukraine conflict. This continues to weigh on global energy markets and is expected to keep crude oil prices relatively subdued, with projections in the range of US$60– US$65 per barrel.
For Nigeria, this is a concern because oil prices below the fiscal breakeven level could constrain government revenues, widen fiscal deficits and increase borrowing.
The 2026 federal budget is benchmarked at about US$64.85 per barrel, so prolonged weakness or volatility in oil prices could exert pressure on yields and potentially crowd out private sector credit. If not carefully managed, this could pose headwinds for equities. That said, Nigeria is now less oil-dependent than in the past, which provides some buffer.
On the domestic front, what factors give you confidence about the market’s resilience in 2026?
Domestically, the outlook is cautiously optimistic. The Central Bank projects GDP growth of about 4.49 per cent in 2026, supported by ongoing structural reforms. More importantly, inflation is forecast to moderate further to an average of about 12.94 per cent, while exchange rate stability is expected to improve on the back of rising reserves, steady remittances and sustained investor confidence.
If inflation continues to decline, real investment returns will improve, consumer purchasing power will strengthen and sectors such as consumer goods will benefit significantly.
Monetary policy is also expected to gradually ease, which could lower yields on fixed-income instruments and encourage portfolio rebalancing towards equities, especially dividend-paying stocks. Another important development is the Nigeria Tax Act (NTA) 2025.
By streamlining multiple taxes and creating a more efficient fiscal framework, the Act could improve the ease of doing business, boost corporate profitability and enhance dividend-paying capacity. Over time, this should deepen market participation and attract more institutional investors.
What should investors realistically expect from the Nigerian stock market in 2026, and how should they position themselves?
After a 51 per cent rally in 2025, it is unrealistic to expect a repeat of such extraordinary returns in 2026. Base effects alone suggest that headline returns will likely moderate. We are more likely to see selective rallies driven by earnings quality, balance-sheet strength and sector-specific catalysts.
Recapitalization will remain a dominant theme, not just in banking but also in insurance, pensions and capital market operators. This will create opportunities through rights issues, private placements and mergers, but also introduce dilution risks. Major listings could be game changers.
The planned listing of the Dangote Petroleum Refinery, for example, could significantly deepen market liquidity and attract substantial foreign capital, provided the political will and market readiness align.
In this increasingly VUCA, volatile, uncertain, complex and ambiguous environment, my long-standing investment counsel remains relevant: diversification, prudent hedging and a long-term perspective, what I call the DHL approach. Investors who focus on fundamentals rather than short-term noise are more likely to preserve capital and generate sustainable returns in 2026 and beyond.
