The curtains closed on 2025 with the Nigerian stock market delivering a performance that not only defied expectations but etched its name into the annals of history. The Nigerian Exchange All-Share Index (ASI) posted a full-year return of 51.19 percent – its strongest showing in nearly two decades. The bull-run propelled equities market capitalization to the cusp of the N100 trillion mark, a psychological and symbolic milestone that underscores the market’s growing depth and rising investor confidence.
This remarkable performance placed Nigeria among the best-performing equity markets globally in 2025, outperforming most emerging and frontier peers, where equity returns largely remained in the low-to-mid teens amid lingering geopolitical tensions, tight financial conditions earlier in the year and uneven global growth. Comparable historical performances in Nigeria were last recorded in 2020 (50.0 percent), 2013 (47.2 percent), 2023 (45.9 percent) and 2017 (42.3 percent), underscoring just how exceptional 2025 turned out to be.
Interestingly, the 2025 market performance was broad-based, characterized by strong sectoral participation and notable stock-specific outperformance. The consumer goods sector emerged as the star performer, delivering a remarkable 129.6 percent return. This rally was largely underpinned by improved earnings, easing foreign exchange losses as currency stability returned, and renewed investor confidence in pricing power amid moderating inflation. Stocks such as Guinness Nigeria, Vitafoam, Champion Breweries, Honeywell Flour Mills and NASCON recorded extraordinary gains, while heavyweights including Nigerian Breweries, Nestle and Unilever also posted impressive advances.
The insurance sector followed closely with a 65.6 percent return, buoyed by renewed confidence following the signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025. Anticipation of recapitalization-driven balance-sheet strengthening sparked strong price appreciation, with Sovereign Trust Insurance, AIICO and NEM Insurance leading the charge. Similarly, the industrial goods sector gained 58.9 percent, driven by strong construction demand and stock-specific rerating, most notably Beta Glass, which delivered an exceptional return of over 470 percent. Cement majors and building materials producers also contributed meaningfully to sector performance.
The banking sector, despite regulatory headwinds and dividend suspensions linked to the Central Bank of Nigeria’s (CBN) forbearance directive in mid-2025, still delivered a respectable 39.8 percent return. Investors largely looked beyond near-term constraints, focusing instead on the transformative impact of the ongoing banking sector recapitalization, which raised over N2.5 trillion from 16 banks ahead of the March 2026 deadline. The only laggard was the oil and gas sector, which closed the year slightly negative, weighed down by mixed crude oil price dynamics and stock-specific challenges.
This stellar performance was shaped by a confluence of global and domestic developments. Globally, 2025 was characterized by moderate growth of about 3.2 percent, easing inflation and a gradual pivot toward less restrictive monetary policies in advanced economies. Although geopolitical tensions, particularly the Russia–Ukraine conflict, continued to cloud the outlook, global financial conditions eased relative to 2024, supporting risk appetite across emerging and frontier markets.
On the domestic front, Nigeria benefited from improving macroeconomic stability. GDP growth strengthened to about 3.9 percent, inflation moderated to around 14 percent following CPI rebasing and tight monetary policy, and foreign exchange stability improved, supported by higher capital inflows, and expanding domestic refining capacity. External reserves rose to about $45 billion, sufficient to cover over 10 months of imports, while the balance of payments recorded a surplus. Crucially, foreign portfolio inflows surged by over 800 percent to approximately N1.12 trillion, reflecting renewed international confidence in Nigerian assets. Furthermore, landmark reforms – such as the passage of the Investment and Securities Act (ISA) 2025 and the implementation of the T+2 settlement cycle – further aligned Nigeria’s capital market with global best practices and enhanced investor protection. In addition, the banking sector recapitalization exercise, which saw over N2.5 trillion raised ahead of schedule, injected fresh capital and optimism into the financial system.
Having delivered a blockbuster performance in 2025, the Nigerian stock market enters 2026 from a position of strength, albeit not without meaningful risks and moderating factors. As I gaze into the crystal ball for 2026, the outlook is one of cautious optimism, framed by a combination of supportive domestic tailwinds and persistent global headwinds.
On the global front, the spectre of geopolitical tensions, particularly the lingering Russia–Ukraine conflict, continues to cast a shadow. This is expected to keep global oil prices subdued, with projections hovering around $60 – $65 per barrel, a level significantly below Nigeria’s fiscal breakeven. Persistently low or volatile oil prices below $65 per barrel could constrain fiscal space, widen deficits and keep government borrowing elevated, especially given that the 2026 federal government budget is benchmarked at $64.85 per barrel. This environment may exert upward pressure on yields and crowd out private sector credit, posing a potential headwind to equities if not carefully managed.
Domestically, however, the pillars for sustained market resilience appear firmer. The CBN projects GDP growth to accelerate to 4.49 percent in 2026, supported by ongoing structural reforms. More critically, inflation is forecast to moderate substantially to an average of 12.94 percent, while the exchange rate is expected to remain broadly stable on the back of rising reserves, steady remittances and improved investor confidence. If realized, the disinflationary trend would boost real investment returns and enhance consumer purchasing power, particularly benefiting the consumer goods sector. In the same vein, monetary policy is expected to gradually ease, supporting equity valuations. Lower yields on fixed-income instruments could encourage portfolio rebalancing toward equities, especially dividend-paying and growth stocks.
Another pivotal factor will be the implementation of the Nigeria Tax Act (NTA) 2025. By streamlining multiple taxes and creating a more efficient and equitable fiscal regime, the Act holds the promise of improving the ease of doing business and bolstering corporate profitability. For listed companies, a clearer and potentially less burdensome tax environment could translate into stronger bottom lines and enhanced dividend-paying capacity, thereby making equities more attractive. Over time, a more transparent tax framework should support deeper market participation by both domestic and institutional investors.
Beyond these macro considerations, valuation dynamics will also come into play. After a 51 percent rally in 2025, base effects are likely to temper headline returns in 2026. History suggests that periods of outsized gains are often followed by phases of consolidation or more selective rallies. While this does not signal an imminent bear market, it does imply that returns may be more modest and increasingly stock-specific. At the same time, recapitalization-driven market activity is expected to remain a dominant theme. Ongoing recapitalization programmes across the banking, insurance, pension and capital market operator segments are likely to trigger further rights issues, private placements, mergers and acquisitions, creating both opportunities and dilution risks for investors.
Equally significant are potential major listings that could act as game changers. The confirmed plan by Aliko Dangote to list the Dangote Petroleum Refinery in 2026 could be the defining market event of the year. When combined with persistent market speculation about the listing of selected state-owned enterprises, such developments could unlock trillions of naira in value, significantly deepen market liquidity, attract foreign capital and re-rate the entire market – provided political will aligns with market readiness. In addition, continued regulatory and market infrastructure reforms should further enhance Nigeria’s investment appeal. The full operationalization of ISA 2025 and a potential migration toward a T+1 settlement cycle would reduce systemic risk and improve market efficiency. Enhanced digital platforms are also expected to improve transparency, accessibility and participation, particularly among retail investors.
Overall, the outlook for the Nigerian stock market in 2026 is cautiously optimistic. While the market may not replicate the extraordinary returns of 2025, the structural reforms underway, improving macroeconomic fundamentals, anticipated major listings and recapitalization-driven activity provide a solid foundation for sustained growth. For investors, the year 2026 is likely to reward selectivity over exuberance. The era of indiscriminate rallies may give way to more differentiated performance driven by earnings quality, balance-sheet strength and sectoral positioning. Banking, insurance and select consumer goods stocks remain attractive, while additional opportunities may emerge from recapitalization-induced corporate actions and new listings.
Therefore, in navigating what remains a VUCA – volatile, uncertain, complex and ambiguous – environment, my long-standing investment counsel remains relevant: Diversification, prudent Hedging and a Long-term perspective (the DHL approach). Investors who align their strategies with Nigeria’s ongoing market transformation, rather than short-term noise, are more likely to preserve capital and generate sustainable returns in 2026 and beyond.
Uche Uwaleke, a professor of capital market at Nasarawa State University, Nigeria, is the president, Capital Market Academics of Nigeria.
