Nigeria’s stock market is expected to record a mild recovery in the second half of 2026, driven by improving corporate fundamentals, stronger earnings and sustained macroeconomic reforms, despite persistent high interest rates and growing political and economic risks.
The Chief Executive Officer of HighCap Securities Limited, David Adonri, made the projection on Tuesday during the Capital Market Correspondents Association of Nigeria Mid-Year 2026 Capital Market Review and Outlook held in Lagos.
Adonri said the equities market is expected to gradually regain momentum as investors respond to stronger corporate earnings, improved economic indicators and increasing confidence in Nigeria’s economic reform programme.
He, however, warned that inflationary pressures, political activities ahead of the 2027 general elections, insecurity, simultaneous capital-raising exercises by companies and the ongoing conflict in the Gulf region could pose significant downside risks to market performance.
According to him, the recent correction on the Nigerian equities market should not be viewed as a sign of structural weakness but as a normal phase of institutional portfolio repositioning following the strong rally triggered by economic reforms.
“The current market correction is a result of institutional investors repositioning their portfolios and not an indication of a breakdown in market fundamentals,” he said, adding that investor confidence remains supported by improving macroeconomic conditions.
Adonri projected that the equities market would experience a gradual rebound in the second half of the year, supported by stronger corporate fundamentals and improved earnings prospects among listed companies.
He also predicted that the prevailing high interest rate environment would persist, although Exchange Traded Products (ETPs) are expected to realign with their underlying fundamentals as market conditions improve.
According to him, the activation of the commercial papers and derivatives markets would deepen Nigeria’s capital market, broaden investment opportunities and enhance market liquidity.
Adonri identified the anticipated listing of the Dangote Refinery on the Nigerian Exchange as one of the most significant developments expected in the coming months, describing it as a potential game changer capable of transforming the size, depth and attractiveness of the domestic capital market.
Reviewing Nigeria’s macroeconomic outlook, he noted that the country’s ongoing economic reforms continue to receive positive international recognition.
He said the International Monetary Fund has acknowledged improvements in Nigeria’s macroeconomic performance, while major global credit rating agencies have upgraded or affirmed the country’s sovereign credit ratings.
According to Adonri, S&P Global Ratings upgraded Nigeria’s sovereign credit rating to ‘B’ from ‘B-‘ with a stable outlook in May 2026, while Fitch Ratings affirmed the country’s rating at ‘B’ with a stable outlook. He added that Moody’s Ratings also upgraded Nigeria’s rating to ‘B3’ from ‘Caa1’.
He attributed the improved ratings to growing confidence in Nigeria’s economic management, supported by increased foreign exchange stability, rising external reserves and higher crude oil production.
On the broader economy, Adonri noted that both the World Bank and the IMF project Nigeria’s economy to grow by 4.1 per cent in 2026, while the Central Bank of Nigeria forecasts a stronger growth rate of 4.49 per cent.
He identified rising crude oil production, expanding domestic refining capacity, improving foreign reserves and a relatively stable and appreciating naira as key factors expected to boost investor confidence and economic growth.
Despite these positive indicators, Adonri cautioned that elevated inflation, election-related uncertainties, concurrent corporate fundraising programmes, insecurity and geopolitical tensions in the Gulf region could weigh on investor sentiment and capital flows.
He stressed that the performance of the capital market remains closely linked to prevailing economic and political conditions, noting that policy consistency and macroeconomic stability are essential to sustaining investor confidence.
Adonri expressed optimism that, although the reform-driven rally has entered a correction phase, the market’s underlying fundamentals remain strong and are expected to support a gradual recovery as institutional investors complete their portfolio adjustments and ongoing economic reforms continue to gain traction.
