Nigeria’s Stock Market Hits Historic Highs in 2026—but Hidden Risks Lurk Beneath the Rally
Nigeria’s stock market has entered 2026 on a historic high, with total market capitalization crossing the ₦100 trillion mark and the All-Share Index closing last week at 165,512 points. Year-to-date gains stand at roughly 6.36 percent, reinforcing optimism that bullish momentum could extend further into the year. Analysts say ongoing reforms and potential new listings could drive returns as high as 40 percent, cementing equities as one of Nigeria’s strongest-performing asset classes.
However, beneath the market’s glittering performance lie deep structural concerns. Valuations across the Nigerian Exchange Group (NGX) are increasingly stretched, driven by a shortage of quality listed assets and heavy concentration of liquidity in a handful of blue-chip stocks. Beyond Tier-1 banks and bellwethers such as MTN, Dangote, and BUA, trading volumes thin out sharply, making it difficult for investors to exit large positions without triggering steep price declines.
This liquidity challenge creates what analysts describe as a “ghost market”—one where gains appear impressive on paper but can quickly evaporate when investors attempt to sell. Even profitable companies can become illiquid traps, forcing shareholders to accept heavy discounts just to find buyers. For foreign investors, the risk is magnified by currency depreciation, as strong equity returns can be wiped out if the naira weakens faster than share prices rise.
Looking ahead, 2026 presents additional pressure points. As Nigeria moves toward the 2027 general elections, rising government spending could stoke inflation, complicate fiscal planning, and distort market signals. At the same time, lingering challenges such as shallow investor diversification, capital controls, and broader economic instability continue to cap upside potential for several sectors.
Still, there are bright spots on the horizon. The expected listing of the Dangote Petroleum Refinery—valued near $20 billion—could inject significant liquidity and global attention into the market. Meanwhile, recapitalized Tier-1 banks like Zenith Bank and UBA are emerging as financial “fortresses,” with return-on-equity projections approaching 45 percent by the end of 2026. While dividends may be temporarily constrained by regulatory requirements, analysts believe Nigeria’s equity market could regain its sparkle over the medium term—provided investors remain alert to the risks behind the rally.
source: nairametrics