Analyst Projects Mild Stock Market Recovery in H2, Warns of Election Risks

Nigeria's stock market is poised for a modest recovery in the latter half of 2026, according to David Adonri, CEO of HighCap Securities Limited. Speaking at the Capital Market Correspondents Association of Nigeria (CAMCAN) Mid-Year Review, Adonri cited improving corporate fundamentals and sustained macroeconomic reforms as key drivers for this optimism. He anticipates that investors will increasingly respond to stronger corporate earnings, better economic indicators, and growing confidence in Nigeria's reform agenda, leading the equities market to gradually regain momentum.

However, Adonri cautioned that significant downside risks could impede market performance. These include persistent high interest rates, ongoing inflationary pressures, and the looming political landscape ahead of the 2027 general elections. Other concerns highlighted were insecurity, simultaneous capital-raising activities, and the broader impact of the conflict in the Gulf region. Adonri clarified that the recent market correction should be viewed as a normal phase of institutional portfolio repositioning rather than a sign of structural weakness, with investor sentiment still largely supported by improving macroeconomic conditions.

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The current market correction is a result of institutional investors repositioning their portfolios and not an indication of a breakdown in market fundamentals.

Looking ahead, Adonri predicted a continued high interest rate environment but expects Exchange Traded Products (ETPs) to see a realignment in valuations as market conditions improve. The activation of the commercial papers and derivatives markets is also expected to deepen Nigeria's capital market, expand investment opportunities, and enhance liquidity. A major development anticipated is the listing of Dangote Refinery on the Nigerian Exchange, which Adonri described as a potential "game changer" capable of significantly transforming the size, depth, and attractiveness of the domestic capital market.

Reviewing Nigeria's macroeconomic performance, Adonri noted the international endorsement of recent economic reforms. He pointed to acknowledgments from the International Monetary Fund (IMF) regarding improved macroeconomic outcomes and upgrades or affirmations of Nigeria's sovereign credit ratings by leading global agencies. Notably, 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 its rating.

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The anticipated listing of Dangote Refinery on the Nigerian Exchange, which he described as a potential game changer capable of transforming the size, depth and attractiveness of the domestic capital market.