The Nigerian stock market experienced a significant bull run in 2025, closing the year with a remarkable 51.19% return, signaling a positive response to government reforms. The Composite All-Share Index reached a record high of 155,613 basis points, with market capitalization nearing N100 trillion. Market analysts are optimistic that 2026 may match or even surpass the previous year’s performance, provided there are no unforeseen economic shocks.

What you should know

The impressive performance of the Nigerian Exchange Limited (NGX) in 2025 is attributed to the government's realignment of the naira with market forces and the removal of fuel subsidies. These policies, while initially causing inflation to spike to 30% at the start of the year, are now yielding positive corrective benefits for the economy. The stock market, often seen as a leading indicator of economic health, quickly reflects these changes, attracting “smart money” seeking a hedge against inflation.

Data indicates that the market's growth was broad-based, spanning across various sectors including consumer goods, industrials, and insurance. Even the banking sector demonstrated resilience despite regulatory pressures, recapitalization requirements, and reduced focus on foreign exchange dealings. According to Nairametrics reporting, a narrow group of sectors comprising Consumer Goods, ICT, Industrial Goods and Banking, controlled almost 79% of the value of transactions and total returns of Nigeria's stock market.

Market implications

The strong performance in 2025 suggests increased investor confidence in the Nigerian economy following the implementation of key reforms. The realignment of the naira and removal of fuel subsidies, although initially painful, appear to be laying a foundation for sustainable growth. This positive momentum could attract further foreign and domestic investment into the Nigerian stock market.

However, investors should remain cautious and monitor key economic indicators, such as inflation and foreign exchange rates, as these could impact market performance. The concentration of market value within a few sectors also suggests that diversification may be a prudent strategy for investors. While the ICT sector's growth is promising, the reliance on a limited number of sectors can amplify market volatility.

Market watchers believe the ongoing reforms and their impact on corporate earnings will be crucial in determining the market’s trajectory in 2026. Continued fiscal discipline and policies that foster economic stability are essential for sustaining investor confidence and driving further growth in the Nigerian stock market. This means that the government's commitment to these reforms will be closely watched by investors.

Looking ahead

The Nigerian stock market's performance in 2025 provides a positive outlook for 2026, but vigilance and strategic investment decisions are crucial. The effectiveness of government policies in maintaining economic stability and fostering diversification across various sectors will be key determinants of future market success. Investors should stay informed about macroeconomic trends and company-specific developments to navigate the market effectively.