The Nigerian Stock Exchange (NGX) record-breaking run has shaken the country’s financial landscape, with market capitalization exceeding N100 trillion in early 2026.
The “glitter” often conceals structural and systemic risks.
The All-Share Index last week closed at 165,512 points and year-to-date gains of about 6.36%.
In recent months, the index has reached all-time highs above 155,000–167,000, suggesting that bullish sentiment might continue in 2026.
According to analysts, reforms and listings (e.g.) could spur additional growth, with some forecasts suggesting up to 40 percent for the year.
The Nigerian stock market, particularly the Nigerian Exchange Group (NGX), is experiencing a “premium” (high valuations compared to historical norms) attributed to a combination of rapid structural reforms, heightened macroeconomic stability, and a significant supply/demand imbalance for quality assets.
No matter how your portfolio looks, with a 150% gain, that money is “not real” until you can sell (liquidate).
The Trap: Many of the NGX stocks (besides the top “Tier-1” banks and blue chips like Dangote or BUA) are characterized by very low trading volumes.
In Nigeria, Liquidity is often focused on the “bellwether” stocks (like MTN, UBA, or Zenith Bank). Beyond the top 30 stocks (the NGX-30), liquidity is a “ghost,” that is, it looks present on paper, and it is possible to trade; however, the volume is floating, and trading in large quantities to avoid price declines is very difficult.
The Risk: You can find yourself owning shares in a lucrative company, but you are unable to find a purchaser and are forced to sell to a purchaser for a large discount.
This could be the most significant element apart from gold for investors.
The Math: If, for instance, NGX gives you 30% returns in a year and the Naira depreciates by 40% against the Dollar or Euro in the same time frame, you have not gained anything. You have lost purchasing power.
Foreign Investors: This is the reason foreign portfolio investment (FPI) is still apprehensive despite mid-term
Stability in Nigeria’s foreign exchange market; they are not only betting on the firms, but they are also betting on the Naira losing power.
Pressures in 2026 – Election year, A rise in federal government expenditure may lead to an increase in monetary inflation, amplified distortion of market functions, or create unpredictability in fiscal policy planning, thus hurting the equity market since it is an election year for the upcoming polls in 2027
Persistent Challenges – Shallow investor diversification, some retail investor participation restrictions still in place (though reformed), currency controls, and widespread economic instability (debt burdens, albeit in some metrics, easing) restrict the upside. Vulnerability to global or domestic shocks persists for some sectors.
The Central Bank (CBN) suspended dividend distributions for some banks to achieve the new recapitalization deadlines by March 2026.
The Central Bank (CBN) suspended dividend distributions for some banks to achieve the new recapitalization deadlines by March 2026.
The Reality: Most Nigerian investors and pension funds are addicted to “yield” (income), buying bank stocks. Changes to the financial sector over the last few years are partly due to the CBN’s mandate for banks to expand their capital base. this will be the most significant transformation for the Nigerian banking industry amid the deadline
However, the local equity market is expected to show some sparkles in the mid-term.
Africa’s richest man is expected to keep the spark on Nigeria’s most important equity market. The most significant event for 2026 will be the listing of the Dangote Petroleum Refinery. Investors are already positioning for the significant liquidity of the $20 billion valuation and boosting the optics of the country’s capital market.
Nigerian capitalised banks are becoming large Fortress financial assets. They can underwrite significant-scale infrastructure financing, which is expected to boost investors’ interest in the long term
Price targets for Tier 1 banks like Zenith and UBA have been revised upwards due to Return on Equity forecasts. These banks are expected to record close to 45% ROE by the end of 2026.