Gilbert Ayoola
Nigeria’s capital market has continued overtime delivered an impressive numbers sequel of performance, consolidating positive growth returns alongside resilient liquidity momentum. Capital formation remained firm despite intermittent profit-taking, reflecting a mature market response to price discovery rather than systemic weakness. The pattern of pullbacks and recoveries has largely mirrored broader market movements, underscoring depth and improving efficiency.
This performance has been underpinned by a gradually improving macroeconomic backdrop. Easing inflationary pressures, combined with a more stable naira, have contributed to incremental foreign exchange stabilisation. These dynamics have restored investor confidence, particularly among foreign direct investors and portfolio managers who had previously adopted a wait-and-see stance. Renewed FX confidence has supported capital inflows, while domestic participation has strengthened meaningfully, signalling rising trust in the market’s medium to long-term prospects.
Corporate fundamentals have equally justified the market’s upward trajectory. Quoted companies across key sectors reported stronger earnings, healthier balance sheets and improving margins, reflecting better cost management and expanding economic activity. Dividend declarations have reinforced the attractiveness of equities as both growth and income assets, positioning the market as a credible hedge against inflation and currency risk.
Market Outlook for 2026
Looking ahead to 2026, the outlook for the Nigerian capital market remains constructive. Expectations of further expansion in the All-Share Index and total market capitalisation are anchored on three core drivers:
● Macroeconomic Stabilisation: Continued moderation in inflation and sustained FX management are likely to support valuation re-rating and longer investment tenors.
● Earnings Growth: Corporate profitability is expected to remain on an upward trajectory as economic reforms filter through productivity, consumption and trade.
● Liquidity and Participation: Increasing domestic institutional participation, alongside selective foreign inflows, stand as catalyst in deepening liquidity and reduce volatility over time.
While market corrections are inevitable, they are expected to be largely technical and offer entry opportunities rather than signal structural weakness.
Sectors to Watch in 2026
As the market enters 2026, investors should prioritise fundamentally strong sectors with proven earnings resilience and scalable growth prospects:
1. Banking and Financial Services
The banking sector remains a cornerstone of market performance, supported by improved interest margins, digital expansion and consistent dividend payouts.
Stocks to watch: Zenith Bank, GTCO, Access Holdings, UBA, Stanbic IBTC, First HoldCo, Wema Bank – favoured for capital adequacy, earnings resilience and shareholder returns.
2. Telecommunications and Technology-Driven Services
Rising data consumption, fintech integration and recurring revenue streams continue to drive sector growth.
Stocks to watch: MTN Nigeria, Airtel Africa – dominant operators with strong cash flows and expanding digital ecosystems.
3. Consumer Goods (Selective Exposure)
As inflation moderates and consumer confidence gradually improves, companies with pricing power and efficient cost structures are best positioned.
Stocks to watch: Nestlé Nigeria, Guinness Nigeria, Nigerian Breweries, Dangote Sugar, BUA Foods – leaders with strong brands and operational scale.
4. Energy and Power
Reforms in the energy space and growing industrial demand support long-term prospects for oil, gas and power-related companies.
Stocks to watch: Seplat Energy, Geregu Power, Transcorp Power, Oando – benefiting from improved governance, cash generation and sector reforms.
5. Industrial Goods and Infrastructure
These plays Infrastructure development and construction activity continue to underpin demand in this sector, offering defensive growth characteristics.
Stocks to watch: Dangote Cement, BUA Cement, Lafarge Africa – driven by strong margins, scale advantages and infrastructure-linked demand.
6. Healthcare and pharmaceuticals
These remains one of the non-negotiable sectors due to their discretionary purchases and consumption that rise and fall with consumer sentiment across economic cycles, while offering combinations of scale, growth momentum, profitability, and balance-sheet strength, allowing investors to align exposure with their risk appetite.
Stocks to watch: Fidson Healthcare, May & Baker, MeCure Industries and Neimeth International Pharmaceuticals.
7. Agriculture and Agro-Allied
Agriculture remains a strategic growth sector as Nigeria deepens food security initiatives and export diversification. Rising demand for processed food, backward integration and FX substitution policies support long-term expansion.
Stocks to watch: Presco, Okomu Oil, FTN Cocoa Processors, and Livestock Feeds – noted for strong earnings growth, export exposure and improving margins.
8. Insurance
The insurance sector offers significant upside from a low base, supported by recapitalisation, improving governance and growing awareness of risk management. Valuations remain attractive relative to fundamentals.
Stocks to watch: AIICO Insurance, Custodian Investment, AXA Mansard, Nem Insurance, Consolidated Hallmark, Mutual Benefit Assurance – benefiting from premium growth, investment income and balance-sheet strengthening.
9. Real Estate and REITs
With urbanisation and housing deficits still pronounced, real estate-linked securities offer income and capital appreciation potential, particularly through dividend-paying REITs.
Stocks to watch: UPDC REIT, SFS REIT – attractive for yield-focused investors and portfolio diversification.
10. lCT and Digital Services
Nigeria’s digital economy continues to expand beyond core telecoms into payments, platforms and data services, offering long-term scalability.
Stocks to watch: Chams, CWG – positioned for enterprise digitalisation and public-sector technology adoption.
Conclusion
In summary, Nigeria’s capital market has transitioned from recovery to consolidation, supported by macro stability, improving FX conditions and robust corporate earnings. The 2026 outlook remains positive, with growth in market indices expected to be driven by fundamentals rather than speculation. Investors who focus on quality stocks within resilient and reform-benefiting sectors are best positioned to capture sustainable returns in the evolving Nigerian market landscape.