…Analysts Predict Fresh Rally Amid Strong Fundamentals
Geopolitical tensions arising from the US-Iran conflict fuelled a remarkable 111.13 per cent rally in Nigeria’s oil and gas stocks during the first half of 2026, making the sector the best-performing segment of the Nigerian Exchange Limited (NGX) and reinforcing analysts’ optimism that the equities market still has room for further gains.
The surge in energy stocks came as rising international crude oil prices boosted earnings expectations for upstream oil companies, while sweeping banking reforms, stronger corporate earnings and improving investor confidence combined to propel the broader equities market to one of its strongest first-half performances in recent history.
Although the market experienced heavy profit-taking in June that wiped about N13.29tn from investors’ portfolios, analysts described the correction as healthy and insisted that the underlying fundamentals supporting the rally remain intact.
Data from the NGX showed that the benchmark All-Share Index (ASI) advanced by 47.43 per cent during the first six months of the year, rising from 155,613.03 basis points at the beginning of January to 229,419.18 points at the end of June.
Similarly, total market capitalisation expanded from N99.38tn to N147.22tn, translating into an estimated N47.84tn in wealth creation for investors within the review period.
The biggest winner of the rally was the oil and gas sector.
Escalating tensions between United States, Iran and Israel pushed global crude oil prices sharply higher, significantly improving the earnings outlook for upstream petroleum companies listed on the NGX.
According to sectoral performance tracked by THE WHISTLER as of June 19, the oil and gas index returned 111.13 per cent during the first half of the year, making it the Exchange’s best-performing sector.
Major upstream companies, including Aradel Holdings Plc and Seplat Energy Plc, accounted for much of the rally as investors priced in stronger revenues and profitability amid higher crude prices.
The performance once again highlighted the strong relationship between developments in the international oil market and investor sentiment on the Nigerian bourse.
Beyond oil prices, the successful completion of the Central Bank of Nigeria’s banking sector recapitalisation programme provided another major boost to the market.
The CBN had increased minimum capital requirements to N500bn for international commercial banks and N200bn for national banks, with March 31, 2026, set as the compliance deadline.
The exercise triggered one of the largest capital-raising programmes in Nigeria’s financial history as banks tapped the capital market to strengthen their balance sheets.
The recapitalisation exercise boosted trading volumes, improved market liquidity, attracted domestic and foreign investors and strengthened confidence in banking stocks.
Consequently, the banking index gained 35.77 per cent during the review period, with tier-one banks, led by GTCO Plc, among the biggest beneficiaries.
The industrial goods sector emerged as the second-best performer, recording a remarkable 95.75 per cent appreciation.
The rally was driven largely by cement manufacturers, including Dangote Cement Plc, BUA Cement Plc and Lafarge Africa Plc, whose stronger earnings and sustained investor demand lifted valuations.
Similarly, the commodities sector advanced by 61.29 per cent as agricultural companies such as Okomu Oil Palm Plc and Presco Plc benefited from solid operational performance and growing investor appetite.
Consumer goods stocks recorded a relatively modest gain of 18.14 per cent, reflecting weak consumer purchasing power and slower earnings growth.
Insurance remained the only sector in negative territory, declining by 1.75 per cent as investors continued to express concerns over weak dividend yields and shareholder returns.
Despite the impressive first-half performance, June proved challenging for investors.
After months of uninterrupted gains, both institutional and retail investors moved to lock in profits, pushing the All-Share Index down by about 8 per cent and erasing roughly N13.29tn from market capitalisation.
However, the market recovered modestly during the final trading sessions of the half-year, with analysts viewing the sell-off as portfolio rebalancing rather than a loss of confidence.
President of the Capital Market Academics of Nigeria and Professor of Capital Market at Nasarawa State University, Keffi, Prof. Uche Uwaleke, described the first half of 2026 as one of the most remarkable periods in the history of Nigeria’s capital market.
He noted that the market had already created about N29.83tn in investor wealth by the end of the banking recapitalisation exercise in March before extending the rally in May when the ASI crossed the 250,000-point mark for the first time.
According to him, the rally reflected stronger corporate earnings, successful banking reforms, improving foreign exchange stability and growing confidence in Nigeria’s economic reforms.
Uwaleke also attributed part of the market’s resilience to renewed foreign investor participation.
He cited the National Bureau of Statistics data showing that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent in 2025 to $13.53bn, accounting for more than half of total foreign capital imported into the country.
He added that NGX Group’s strong financial performance, including an 80 per cent increase in first-quarter revenue and a 90 per cent rise in net income, further underscored heightened market activity.
Looking ahead, Chief Executive Officer of HighCap Securities Limited, David Adonri, said the June correction should not be interpreted as a weakening of market fundamentals.
Speaking during the Capital Market Correspondents Association of Nigeria (CAMCAN) Mid-Year 2026 Capital Market Review and Outlook in Lagos, Adonri said institutional investors were merely repositioning their portfolios after the remarkable rally.
He projected that stronger corporate earnings, improving macroeconomic indicators and sustained confidence in Nigeria’s reform agenda would support a gradual recovery during the second half of the year.
Adonri also said the activation of the commercial paper and derivatives markets would deepen the capital market, while the anticipated listing of Dangote Refinery on the NGX could significantly expand the size and attractiveness of Nigeria’s equities market.
He further cited endorsements from the International Monetary Fund, sovereign rating upgrades by S&P Global Ratings, Fitch Ratings and Moody’s, improving foreign exchange stability, stronger external reserves, rising crude oil production and expanding domestic refining capacity as factors expected to sustain investor confidence.
Although analysts identified inflationary pressures, elevated interest rates, political activities ahead of the 2027 general elections, simultaneous capital raising by listed companies, insecurity and geopolitical tensions as key risks, they maintained that the structural drivers behind the market’s rally remain largely intact.
With strong performances across the oil and gas, banking, industrial goods and commodities sectors, market operators believe the Nigerian equities market remains well-positioned to resume its upward trajectory in the second half of 2026.
ENDS
(The Whistler)