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By Uche Usim
Professor of Capital Market at the Nasarawa State University Keffi and President of the Capital Market Academics of Nigeria, Professor Uche Uwaleke, has noted that the extraordinary rally that crowned Nigeria’s stock market in 2025 was not an accident of chance, but a product of reforms, resilience and renewed confidence finally aligning.
As the year closed, the Nigerian Exchange All-Share Index (ASI) had surged by 51.19 per cent, its strongest showing in almost two decades, pushing total market capitalisation to the edge of the symbolic N100 trillion mark. In Uwaleke’s view, the numbers tell a deeper story about a market undergoing structural transformation.
“The 2025 performance was exceptional by any standard,” the capital market scholar notes, pointing out that Nigeria ranked among the best-performing equity markets globally, far ahead of most emerging and frontier peers that struggled to break out of low-to-mid teen returns amid geopolitical tensions and uneven global growth. Historically, similar rallies were last seen in 2020, 2013, 2023 and 2017, reinforcing just how rare—and significant—the 2025 outcome was.
What particularly stands out for Uwaleke is the breadth of the rally. Unlike past cycles dominated by a narrow set of stocks, 2025 delivered strong, broad-based sectoral participation. Consumer goods stocks emerged as the standout, returning an astonishing 129.6 per cent. According to him, improved earnings, easing foreign exchange losses following greater currency stability, and renewed confidence in companies’ pricing power amid moderating inflation combined to ignite the surge.
Stocks such as Guinness Nigeria, Vitafoam, Champion Breweries, Honeywell Flour Mills and NASCON led the charge, while sector heavyweights like Nigerian Breweries, Nestlé and Unilever also posted robust gains.
Insurance followed closely with a 65.6 per cent return, a performance Uwaleke links directly to policy reform. The signing of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 restored investor confidence and fuelled expectations of recapitalisation-driven balance-sheet strengthening. Sovereign Trust Insurance, AIICO and NEM Insurance were among the key beneficiaries. Industrial goods stocks also delivered strongly, gaining 58.9 per cent, buoyed by sustained construction demand and dramatic stock-specific re-ratings—most notably Beta Glass, which returned over 470 per cent in a single year.
Even the banking sector, often viewed as the market’s bellwether, weathered regulatory headwinds to post a respectable 39.8 per cent return. Dividend suspensions linked to the Central Bank of Nigeria’s forbearance directive dampened sentiment mid-year, but Uwaleke says investors ultimately looked beyond the short term, focusing on the transformative impact of recapitalisation. By year-end, 16 banks had raised over ₦2.5 trillion ahead of the March 2026 deadline, injecting fresh capital and optimism into the financial system. Oil and gas was the only sector to close the year slightly negative, reflecting mixed crude price dynamics and company-specific challenges.
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Uwaleke situates the rally within a supportive global and domestic backdrop. Globally, 2025 saw moderate growth of about 3.2 per cent, easing inflation and a gradual shift toward less restrictive monetary policies in advanced economies. Although geopolitical risks—especially the Russia–Ukraine conflict—persisted, global financial conditions improved relative to 2024, supporting risk appetite for emerging and frontier markets.
At home, macroeconomic stability strengthened. GDP growth rose to around 3.9 per cent, inflation moderated to roughly 14 per cent following CPI rebasing and tight monetary policy, while foreign exchange stability improved on the back of higher capital inflows and expanding domestic refining capacity. External reserves climbed to about US$45 billion, enough to cover more than 10 months of imports, and the balance of payments returned to surplus. For Uwaleke, one of the clearest confidence signals was the surge in foreign portfolio inflows—up over 800 per cent to approximately ₦1.12 trillion in 2025.
As the market turns the page to 2026, Uwaleke’s outlook is cautiously optimistic rather than euphoric. On the global front, lingering geopolitical tensions are expected to keep oil prices subdued around US$60–US$65 per barrel, levels below Nigeria’s fiscal comfort zone and close to the 2026 budget benchmark. Sustained price weakness, he warns, could constrain fiscal space, keep borrowing elevated and exert upward pressure on yields, potentially crowding out private sector credit.
Domestically, however, he sees firmer pillars of support. The Central Bank projects GDP growth of 4.49 per cent in 2026, while inflation is forecast to moderate to an average of 12.94 per cent. A more stable exchange rate, rising reserves and steady remittances should further support investor confidence. If these projections hold, Uwaleke argues, real investment returns will improve, consumer purchasing power will rise, and equities—particularly in consumer goods—will remain attractive.
He also highlights the Nigeria Tax Act (NTA) 2025 as a potential medium-term catalyst. By streamlining multiple taxes and improving fiscal efficiency, the Act could boost corporate profitability, strengthen dividend capacity and deepen market participation. At the same time, valuation dynamics suggest 2026 may be a year of consolidation rather than another explosive rally. After a 51 per cent surge, returns are likely to be more modest and increasingly stock-specific.
Still, Uwaleke believes structural themes will keep the market engaged. Ongoing recapitalisation across banking, insurance, pensions and capital market operators is expected to drive rights issues, private placements and mergers. Perhaps most significantly, the planned listing of the Dangote Petroleum Refinery in 2026 could redefine the market’s landscape, unlocking trillions of naira in value and attracting fresh foreign capital.
In Uwaleke’s final assessment, 2026 will reward discipline over exuberance. The era of indiscriminate rallies may be fading, but Nigeria’s market transformation is far from over. For investors willing to stay diversified, hedge prudently and think long term, he insists, the opportunity remains compelling—even in a volatile and uncertain world.
