The Nigerian equities market is expected to record further growth in the second half of 2026, but investors should not expect the exceptional pace of gains recorded in the first half to continue unabated, analysts at Coronation Asset Management have said.
Presenting the firm’s market outlook, Dr. Timilola Adeyemi and Gbemi Adelokiki say the performance of the equities market in the first half of the year had been driven largely by oil and gas, industrial and banking stocks, while developments in the Dangote Refinery, corporate restructuring and the telecoms sector could determine the direction of the market in the months ahead.
Their assessment came as the Managing Director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, said the broader market was at an inflection point, with domestic capital emerging as the principal force behind the rally.
Coronation identifies Aig-Imoukhuede as its Managing Director and says his expertise spans wealth management, corporate banking, treasury and capital-market transactions.
The analysts cautioned against using short-term market performance as the sole basis for assessing the direction of Nigerian equities, pointing to significant differences in sector performance between the first halves of 2025 and 2026.
They said the oil and gas sector, which recorded a negative return in H1 2025, had gained more than 90 per cent in H1 2026, while the industrial sector rose from a 41.5 per cent return last year to more than 85 per cent this year.
The pension sector also improved from about two per cent in H1 2025 to more than 70 per cent in H1 2026, while banking stocks rose from 49 per cent to more than 66 per cent over the same period.
According to the analysts, the NGX’s performance was also significantly stronger, although consumer and insurance stocks did not replicate the gains recorded in some other sectors.
Market Rally Driven by Domestic Capital
Aig-Imoukhuede said the NGX had delivered a 57 per cent return in the first seven months of 2026, while total market capitalisation expanded by ₦58.9 trillion to ₦158.2 trillion.
He said the impressive rally, however, raised the question of whether the momentum was sustainable or merely temporary.
A key feature of the rally, according to him, was that it had been driven predominantly by domestic investors rather than foreign capital.
Foreign investors accounted for just 12.1 per cent of NGX transaction value by June 2026, compared with 27 per cent a year earlier, while domestic participation increased by 129.1 per cent.
Aig-Imoukhuede said foreign investors had remained net sellers of Nigerian equities during the first six months of the year, with some of their capital moving into short-dated government securities offering yields close to 20 per cent.
He identified domestic institutional investors, particularly pension funds following changes in investment thresholds, and renewed retail participation as major forces behind the equities rally.
He described the development as a sign of increasing market maturity, arguing that markets become more resilient when supported by savings rather than speculation.
H2 Market Outlook
Looking ahead, the analysts said the market would be shaped by a combination of macroeconomic developments, corporate earnings, crude oil prices, liquidity and major corporate actions.
The Dangote Refinery was identified as one of the key developments investors would be watching in the second half of the year.
They said some investors were positioning funds in OMO bills and money-market instruments while awaiting developments around the refinery and assessing its implications for the downstream petroleum market.
Developments in the upstream oil and gas sector would also remain important, particularly for companies such as Seplat, RIL and Oando.
The analysts said rising gas prices had generated discussions about whether companies should separate their gas businesses from their oil operations in order to unlock separate valuations.
Oando’s planned rights issue in H2 2026 was also highlighted as an important development. The analysts, however, expressed reservations about the company’s current financial position and valuation, while expecting some stabilisation going forward.
Telecoms Face Margin Pressure
The telecoms sector could face a more complicated outlook despite strong underlying demand for data services.
The analysts said telecom operators’ heavy reliance on diesel-powered generators because of Nigeria’s power challenges meant that higher crude oil prices could translate into increased operating costs.
This, they warned, could put pressure on margins and potentially offset some of the benefits of rising data consumption.
They also pointed to potential corporate restructuring in the sector, including Airtel’s plans to separate parts of its financial-services operations and seek a separate valuation.
The analysts questioned whether MTN could eventually adopt a similar strategy and whether data services could become a more distinct source of value as voice revenues face slower growth.
Market Reforms and Foreign Investors
The analysts also reviewed recent structural changes in the Nigerian capital market, including the transition from T+2 to T+1 settlement.
They said the change had generated concerns about its potential impact on foreign investors but noted that market data had not shown the severe disruption some participants had anticipated.
They also discussed the NGX pricing framework, which had been scheduled for implementation in August 2026 but was subsequently postponed without a new implementation date at the time of the presentation.
On foreign investors, they said the NGX had clarified that the new settlement arrangements did not require foreign investors to withdraw from the Nigerian market or pre-fund their accounts.
However, the analysts said some aspects of the delivery-versus-payment arrangement remained unclear and would require further clarification.
Foreign Capital Could Return
Aig-Imoukhuede said the conditions for renewed foreign participation were gradually improving.
He cited the ongoing attention of global index providers, including FTSE Russell and S&P Dow Jones Indices, as potential catalysts for international capital.
Improved foreign-exchange liquidity, a stronger naira and more sustainable sources of foreign-exchange inflows were also identified as factors that could strengthen investor confidence.
He said the continued performance of Nigerian companies would be equally important in determining whether foreign investors return to equities.
The Coronation MD said investors should focus on companies with strong earnings momentum, sound governance, liquidity and clear pathways to benefit from renewed foreign participation.
Investors Urged to Prioritise Quality
Aig-Imoukhuede advised investors to prioritise quality over convenience, saying the short end of the fixed-income curve could become increasingly crowded as investors seek high-yielding short-term instruments.
He said opportunities would increasingly lie in selectively extending duration through quality credits, infrastructure debt and carefully chosen fixed-income exposures.
He also urged investors to position ahead of market catalysts rather than wait until such developments become fully priced.
“The best opportunities are often identified before consensus recognises them,” he said.
Market Unlikely to Repeat 60% Gain
Despite their positive outlook, the analysts said they did not expect the NGX to sustain a 60–65 per cent year-to-date gain through the end of 2026.
They nevertheless expect further growth, particularly if developments around the refinery, corporate actions, oil prices and other market catalysts materialise.
The analysts maintained a more neutral outlook for sectors such as insurance, agriculture and some areas of the oil market, while identifying specific companies and sectors where they expect stronger performance.
Aig-Imoukhuede, meanwhile, said the ultimate test for the Nigerian market would be its ability to attract and retain global capital.
“Nigeria’s capital markets do not simply need capital. They need trust. They need transparency,” he said, stressing that institutions must be judged by the quality of their thinking and not merely the size of their returns.
He added: “Capital is mobile. Trust is not.”
According to him, Nigeria’s first half demonstrated the strength of domestic capital, while the second half would test the confidence of global investors.
He said the objective should therefore be to build a capital market that is deeper, more trusted, more liquid and more globally relevant, rather than merely pursuing short-term market gains.
Comment here