Analysts See 11.6% H2 Equities Growth Amid Sector Divergence

Capital market analysts have forecast an 11.6 per cent gain for equities in the second half of 2026, but warn that market performance will be uneven across sectors.

After a staggering 57 per cent rally in the NGX All-Share Index through July, experts say investors should focus on earnings quality, valuations and corporate governance as pension funds and domestic institutions — rather than foreign flows — drive the next leg of the market.

They advised investors to prioritise earnings quality, valuations and corporate governance as Nigeria’s equities market enters a more selective phase in the second half of 2026.

This comes after the NGX All-Share Index delivered a 57 per cent return by the end of July, with total market capitalisation rising by N58.9 trillion to N158.3 trillion in the first seven months of the year.

Speaking at the Coronation Media Parley 2026 held in collaboration with the Capital Market Correspondents Association of Nigeria (CAMCAN), the managing director of Coronation Asset Management, Aigbovbioise Aig-Imoukhuede, said the rally should be viewed within the context of structural changes in the market.

He noted that performance in H1 2026 was driven primarily by domestic capital rather than foreign portfolio flows, pointing to the growing role of pension funds, institutional investors and retail participants.

“The rally we have witnessed is not merely a market event. It reflects a stronger domestic capital base, improving macroeconomic stability and a growing opportunity for long-term investors who position thoughtfully for the second half of the year,” Aig-Imoukhuede said.

Head of Equities Research at Coronation Research, Gbemisola Adelokiki, said the strong headline numbers mask wide divergences across sectors and companies. She stressed that selectivity will be critical in H2 2026.

“With several large-cap stocks already experiencing significant re-rating, investors are likely to place greater emphasis on earnings quality, valuations, liquidity, corporate governance and the ability of individual businesses to benefit from the broader economic recovery,” Adelokiki said.

She added that investors will increasingly differentiate between companies with sustainable earnings momentum and those trading on sentiment, as monetary policy is expected to remain broadly stable.

Meanwhile, United Capital Plc, in its report titled ‘Economic and Financial Markets: H1 Review & H2 Outlook – 2026’, projected 11.60 per cent growth for the equities market in H2 2026.

It identified banking, building materials, telecommunications, food and beverages, and power as the key sectors expected to drive performance.

The firm listed improved corporate earnings, better dividend payments, macroeconomic stability, and potential inclusion by global index providers as major catalysts for share price appreciation.

Also, analysts examined conditions that could support renewed foreign participation, noting improving foreign-exchange liquidity, stronger reserve positions and greater currency stability as positives.

“The ongoing banking recapitalisation cycle and broader reform momentum were also cited as factors strengthening the investment case. A potential review of Nigeria’s classification by global index providers was flagged as another possible catalyst, though no outcome was guaranteed,” they said.

On fixed income, Coronation said investors may look beyond short-dated instruments toward selective opportunities in quality credit, infrastructure debt and other longer-term exposures, saying that infrastructure financing was also highlighted as a long-term opportunity, given Nigeria’s capital needs in energy and transport.

Aig-Imoukhuede urged investors to distinguish between waiting for certainty and positioning for probability, noting that “The best opportunities are often identified before consensus recognises them. Those who wait for certainty will almost certainly pay a higher price than those willing to position for probability.”