In the past couple of years, as Nigeria’s economic reforms have kept toughening the investment climate, most discerning investors have taken a ‘flight to safety’. This, they do by massively patronising the debt and equity markets as well as fixed income securities (especially Treasury Bills, Bonds, etc.) issued by the monetary authorities.
Reform-induced high and spiking inflation rate, dilapidated infrastructure, high energy and logistics costs, and rising insecurity have combined to make concrete direct investment unviable and impolitic. Cost of funds sequel to the tight monetary stance of the Central Bank of Nigeria (CBN) since 2023 has also rendered credit facilities virtually inaccessible, and unaffordable to most households and businesses — particularly small and medium-sized enterprises (SMEs). Not a few of these SMEs have, indeed, been scorched by the tough environment.
One upshot of this has been the ‘migration’ of most owners and potential (SME) business floaters to the stock market largely as retail investors. Thus, for upwards of three years, the Nigeria Exchange Limited (NGX) has recorded not only a surge in retail participation but also rapid rise in asset prices. Investor participation in the stock market is an important index for gauging interest and, by extension, demand for Nigerian equities.
The resulting bullish trend in the NGX has seen the market indicators exhibiting exceptional trends, with the Nigerian bourse ranking amongst the best performers in Africa, even globally. For instance, the NGX market capitalisation (which shows the value of the shares of all listed equities per time) rose sharply from N41.0 trillion (at end-2023) to N59.4 trillion in 2024, and further to N74.8 trillion at end-2025. This 2025 figure reflects, in part, the strong rally driven by banking recapitalisation, and the massive domestic investor inflows.
Like in the market capitalisation, the NGX All-Share Index (ASI) has been making quantum leaps, rising from 74,773 points in 2023 to 102,802 points in 2024; and ending 2025 at 129,850 points. It has soared to 142,310 points at the close of the first quarter 2026.
Another notable trend that has been driving these ‘exceptional performance’ scenarios on the NGX has been rapid gains in the prices of most listed equities. These fast-rising asset prices (unfortunately) do not seem to be driven by good fundamentals of the equities, but rather by mere “exuberant market behaviour.” This has been more so with the banking (sector) equities since March 2024 when the recapitalisation exercise commenced.
For example, share prices of almost all the tier-one banks doubled or trebled between end-December 2023 and end-March 2026 when the recapitalisation exercise ended. Looking at a few of the banks: from a share price of N40.5 at end-December 2023, Guaranty Trust (Bank) Holden Company (GTCO) hit N98.2 at end-March 2026. During the same period, Zenith Bank rose from N38.6 to N105.0; Access Bank similarly rose from N23.1 to N67.5.
The CBN’s (2024-2026) recapitalisation data show that, in addition to raising about N4.65 trillion, the NGX platform recorded over 2.2 million new retail accounts in 2025; just as over 80 percent of the NGX transaction value is now domestic. The frenzy and massive (social) media campaigns that went with the banking recapitalisation sustained bullish trends in the stock market.
Almost all Initial Public Offerings (IPOs), offers for public subscriptions; and even rights issues were massively oversubscribed. This underlines the fact that there was a ‘Fear of Missing Out’ (FOMO) behaviour in the market. This means that investors rushed to buy some stocks just because everyone else was buying, and prices kept going up fast. So, it was like: “if I don’t buy now, I’ll miss the big gains.”
This sentiment however shows that Nigeria’s recent economic reforms inadvertently ‘shrank’ the investment space; with foreign investors pandering towards only portfolio investment (FPI). High Monetary Policy Rate (MPR) of over 27.0 percent set by the CBN, pushed (investors) funds from fixed income to equities (market) for inflation hedging. In other words, with inflation rate at 15-34 percent (2023—March 2026), stocks have come to be taken as “store of value.”
NGX current data show that total transactions in the Nigerian stock market rose to N4.14 trillion in the first quarter of 2026; this is almost double the N2.2 trillion recorded in the same period last year. During the first quarter 2026, investor participation in the Nigerian stock market attained an all-time high, underpinning the almost 30 percent gain recorded as of the end of the quarter.
Last year’s total transaction value of about N12 trillion remains the highest level of combined domestic and foreign participation ever recorded. This year, the bullish trend has been sustained, further underpinned by constricting real direct investment space, owing to worsening insecurity, subsisting tight monetary stance, and lingering ripple effects of the Middle East conflict (since end-February 2026).
As the fallout of the Middle East war continues to drive up prices of petrol (Premium Motor Spirit, PMS), diesel, Jet A-1, etc., soaring inflationary trend would subsist and the CBN would stick to its tight monetary policy — to fight inflation. It will keep offering mouthwatering returns (yields) on Treasury Bills, bonds, and other financial instruments.
Meanwhile, the massive publicity that went with banking recapitalisation has unleashed the FOMO (fear of missing out) sentiment on existing and potential investors. Since Nigeria’s local currency (Naira), owing to massive depreciation as a result of recent economic reforms, no longer functions effectively as a ‘store of value’, the herd instinct has driven most Nigerians to invest in the stock market.
The upshot of this has been huge demands for a number of stocks, leading to their continuously rising share prices — though not necessarily underpinned by any good fundamentals. For instance, among the tier-one banks, even those that are unable to declare dividends for the year-ended December 2025, still have their shares literally being mopped up till date. Indeed, some of the banks are still ‘cleaning’ their books — that are dotted with a lot of bad and non-performing loans (NPLs) — after dealing with their ‘forbearance’ issues.
All said, however, the markets and the investors (existing and potential) have been reacting to the import and impact of recent reforms of the government of the day. It is not certain as to how long the investor-frenzy and excitement in the market would last; but it remains ominous for the stock market to be blooming in a fragile business climate. Alas, let all players be wary of ‘bubbles’ and ‘balloons’ in the market!
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Marcel Okeke, a practising economist and consultant in Business Strategy & Sustainability based in Lagos, is a former Chief Economist at Zenith Bank Plc. He can be reached at: obioraokeke2000@yahoo.com; +2348033075697
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