Expert Projects Mild Stock Market Recovery In H2 As Corporate Earnings Improve

The CEO of HighCap Securities Limited, David Adonri, expects Nigeria’s equities market to gradually regain momentum in the second half of 2026, driven by stronger corporate fundamentals and better earnings prospects.

Adonri stated this at the Capital Market Correspondents Association of Nigeria (CAMCAN) Mid-year 2026 Capital Market review and outlook in Lagos.

He said the recent NGX correction reflects normal institutional portfolio repositioning after a reform-driven rally, though risks remain from high interest rates, 2027 election activities, insecurity and the Gulf conflict.

Adonri also forecast a realignment in Exchange-Traded Products valuations and the activation of commercial paper and derivatives markets to boost liquidity, despite elevated inflation and political uncertainty ahead of 2027.

He projected that the equities market would gradually regain momentum as investors respond to stronger corporate earnings, improved economic indicators and growing confidence in Nigeria’s reform agenda.

He, however, cautioned that inflationary pressures, the build-up to the 2027 general elections, insecurity, simultaneous capital-raising exercises and the ongoing conflict in the Gulf region could pose significant downside risks to market performance in the months ahead.

According to him, the recent correction witnessed on the Nigerian Exchange should not be interpreted as a sign of structural weakness in the capital market but rather as a normal phase of institutional portfolio repositioning following the strong rally triggered by economic reforms.

Adonri projected a mild recovery in the equities market in the second half of the year, driven by stronger corporate fundamentals and better earnings prospects across listed companies.

Despite the current high-interest rate environment, he said that Exchange Traded Products (ETPs) is expected to witness a realignment in valuations with their underlying fundamentals as market conditions improve.

He said the activation of the commercial papers and derivatives markets would deepen Nigeria’s capital market, broaden investment opportunities and improve liquidity.

Adonri added that one of the most significant developments expected in the coming months is the listing of the Dangote Refinery on the Nigerian Exchange, describing it as a potential game-changer capable of transforming the size, depth, and attractiveness of the domestic capital market.

Reviewing Nigeria’s macroeconomic performance, Adonri noted that recent economic reforms have continued to receive international endorsement.

According to him, the improved ratings reflect growing confidence in Nigeria’s economic management, supported by increased foreign exchange stability, rising external reserves and higher crude oil production.

He warned that inflationary pressures remain elevated, while political activities ahead of the 2027 elections could heighten uncertainty in financial markets.

He also noted that concurrent capital-raising programmes by companies, lingering insecurity and geopolitical tensions arising from the Gulf conflict may affect capital flows and investor sentiment.