Nigeria’s equities market is heading into 2026 with one of its strongest outlooks in years, buoyed by improving macroeconomic stability, moderating inflation, foreign exchange reforms and expectations of gradual monetary easing, analysts have predicted.

After delivering a robust 51.2 percent return in 2025, the Nigerian Exchange (NGX) is projected to post a further base-case return of about 45.9 percent in 2026, positioning equities as the standout asset class amid pre-election liquidity, capital market deepening and renewed foreign investor interest.

In 2025, Nigerian stocks posted their best outing in nearly two decades this year as the main equity index showed a yield of 51.2 percent. Never since 2007, when equities returned 74.7 percent, had the benchmark index performed that high.

The inflation-beating performance stands 36.8 percent higher than consumer inflation for November, which was 14.5 percent.

The market capitalisation of the 151 quoted stocks on NGX was valued at N99.4 trillion at the end of trade. That compares to N62.8 trillion a year earlier, while the All-Share index closed at 155,613.03 points, up from 102,926 at the beginning of the year.

Looking ahead into the year 2026, Arthur Steven Asset Management Limited (ASAM), in it’s 2025 Macroeconomic Review and 2026 Outlook, said brighter days lay ahead for equities investors.

According to MD/CEO, ASML, during the weekend at the quarterly forum of Capital Market Correspondents Association of Nigeria (CAMCAN), the outlook for the year reflects a transition from crisis management to consolidation, as reforms implemented in 2024 and 2025 begin to translate into improved confidence, stronger earnings visibility and broader participation in the capital market.

Equities lead asset class outlook

The asset manager remains constructive on Nigerian equities, citing stable inflation and foreign exchange conditions, expectations of modest interest rate cuts, and strong domestic liquidity as key drivers of the bull case. The report noted that the services-led structure of the Nigerian economy, combined with resilient corporate performance, should continue to support earnings growth in 2026.

Consumer goods, banking, industrial goods and ICT stocks are expected to remain central to market performance, building on their dominant contribution to returns and transaction values in 2025. The ICT sector, which rose to become the second-largest sector by market capitalisation last year, is projected to play an increasingly strategic role as digitalisation deepens across the economy.

In addition, anticipated landmark listings, including the expected initial public offerings of Dangote Petrochemicals and Dangote Fertiliser, as well as a planned separate listing of Airtel Money, are forecast to significantly expand market breadth, boost liquidity and attract fresh institutional and foreign capital.

“Pre-election liquidity, active capital-raising by insurance companies and pension fund administrators, and improved macro stability provide a supportive backdrop for equities in 2026,” the report said, while cautioning that capital gains tax sensitivity and listing delays remain downside risks.

Fixed income supportive, but less dominant

While equities are expected to outperform, the outlook for fixed income remains positive but more measured. Moderating inflation, easing yield pressures and expectations of gradual monetary easing by the Central Bank of Nigeria (CBN) are likely to support capital gains, particularly on mid-to-long-dated bonds.

However, ASAM expects some rotation out of fixed income into equities as risk appetite improves, especially with pension funds and institutional investors increasingly positioning for growth assets ahead of the 2027 election cycle.

Under its recommended 2026 asset allocation, ASAM advises a 70 percent weighting to equities, 20 percent to fixed income, and 10 percent to cash and cash equivalents, reflecting confidence in risk assets while retaining flexibility to respond to market shocks.

Foreign Participation Returns

Foreign portfolio investment (FPI), which showed a notable recovery in 2025 with Nigeria recording its first net positive foreign inflow in three years, is expected to strengthen further in 2026 if foreign exchange stability is sustained.

FPI in Nigeria showed a sharp rebound in 2025, driven by a 64.7 percent increase in total capital importation to $5.6 billion in Q1 2025, with FPI accounting for 92.3 percent of total inflows, focusing on short-term financial instruments. By July 2025, foreign portfolios on the NGX exceeded N1.28 trillion, more than double the same period in 2024, indicating strong recovery in foreign investor confidence.

With the FX market liberalisation, the introduction of the Nigerian FX Code and improved transparency have enhanced confidence, supported the naira and reduced the risk premium on Nigerian assets. “These factors, combined with attractive real returns, are expected to keep Nigeria on the radar of global frontier and emerging market investors,” Amolegbe noted.

Global Markets: Cautious Optimism

However, globally, the report paints a picture of cautious optimism heading into 2026. World economic growth is projected to ease slightly, with advanced economies settling into slower but stable expansion, while emerging markets continue to drive global growth.

Inflation is expected to remain contained across major economies, creating room for gradual policy easing by central banks. This environment is likely to support equities globally, though ASAM warned that geopolitical tensions, trade disruptions and valuation risks, particularly in technology stocks, remain key watchpoints.

Artificial intelligence continues to dominate the global investment narrative, with sustained capital spending and integration into the real economy supporting long-term growth prospects. At the same time, investors are increasingly rotating geographically and sectorally in search of real returns, a trend that could benefit reform-driven emerging markets like Nigeria.

Risks remain

Despite the bullish outlook, ASAM cautioned that renewed naira volatility, a resurgence in inflation, or a deterioration in global risk sentiment could trigger market corrections and necessitate portfolio rebalancing. In such a scenario, the firm said it would tilt toward defensive equities, shorter-duration fixed income instruments and higher cash buffers.

Still, the overarching message from the report is clear: Nigeria enters 2026 with one of its most supportive equity market backdrops in a decade, underpinned by reforms, improving macro fundamentals and renewed investor confidence.

“If macroeconomic stability is sustained and reforms are consistently executed, Nigerian equities are well-positioned to remain a top-performing frontier market in 2026.” the report concluded.

Expert recommends 70% Portfolio Allocation to Equities

With the projection of a strongly pro-risk stance for 2026, recommending a portfolio allocation heavily tilted toward equities amid improving macroeconomic stability and strengthening investor confidence in the Nigerian financial market.

Amolegbe advised investors to allocate 70 per cent of their portfolios to equities, 20 per cent to fixed income securities, and 10 per cent to cash, cash equivalents and dollar-denominated investments, reflecting what it described as “constructive market conditions” heading into the new year.

The recommended asset mix builds on the framework adopted in the second half of 2025, and is anchored on expectations of sustained naira stability, easing inflationary pressures and a gradual moderation in monetary policy tightening. These factors are expected to continue supporting risk assets, particularly equities, he noted.

Meanwhile, the firm adopted a more selective stance on fixed income, recommending a 20 percent allocation. While yields remain elevated and attractive, ASAM observed that improving sentiment in the equity market has triggered a gradual rotation of funds away from fixed income instruments into risk assets. Consistent with its earlier guidance, the firm favoured long-dated fixed income securities, anticipating that easing inflation, sustained exchange rate stability and a potential moderation in the Monetary Policy Rate would support capital appreciation across the yield curve.

The remaining 10 per cent allocation to cash and cash equivalents is intended to preserve liquidity and provide flexibility, enabling investors to take advantage of market dislocations or tactical opportunities as they emerge.

Overall, ASAM’s asset allocation recommendation underscores growing optimism about Nigeria’s macroeconomic outlook, while emphasising the need for disciplined portfolio construction in a still-evolving market environment.

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