April 05, (THEWILL) — As of March 31, 2026, Nigeria’s capital market delivered one of its strongest performances in recent history, with the Nigerian Exchange (NGX) emerging as the second-best performing equity market globally in the first quarter, trailing only South Korea’s 44.3 percent return. The NGX All-Share Index (ASI) closed the quarter at 201,668.42 points, confirming a 38.88 percent year-to-date gain and marking the first time the benchmark crossed the 200,000-point psychological threshold.
The rally translated into extraordinary wealth creation. Total market capitalisation climbed to a record ₦129.45 trillion (about $84 billion) as investors gained ₦29.83 trillion, roughly $21 billion in three months. The expansion reflected not only rising equity prices but also the supportive effect of a roughly 9 percent appreciation in the naira, which reinforced returns in dollar terms.
Nigeria’s equities market did not arrive at this outcome by chance. What unfolded in the first quarter was a carefully sequenced repricing of risk that began not within equities themselves but in the fixed-income market. At the start of the year, yields on Nigerian instruments remained at peak levels, with the 364-day Treasury Bill offering as much as 28.4 percent in January. By March, that yield had moderated to 24.1 percent, while benchmark Federal Government bond yields compressed across the curve five-year notes declined from 19.8 percent to 17.2 percent, and 10-year bonds from 18.5 percent to 16.9 percent. This shift fundamentally altered asset-allocation decisions across the financial system.
The decisive signal came from the Central Bank of Nigeria, which cut the Monetary Policy Rate by 50 basis points to 26.5 percent in February. Though modest in size, the move marked a turning point in expectations, signalling that the era of aggressive tightening had likely peaked. As the yield curve flattened and real returns in fixed income compressed, capital began rotating rapidly into equities.
That rotation initially concentrated in the market’s most liquid and fundamentally strong names. January’s rally was driven by institutional accumulation in blue-chip stocks, supported by strong earnings expectations and the milestone of a ₦100 trillion market capitalisation. By February, the shift had intensified into a full-scale liquidity event, with the market recording its strongest monthly gain of the quarter at 19.74 percent. Lower yields, improving macro-economic sentiment, and the early return of foreign portfolio investors created a reinforcing cycle in which rising prices attracted more capital and fresh capital drove prices even higher.
Liquidity dynamics underscore the scale of this transition. Domestic investors laid the foundation of the rally, accounting for over 88 percent of market turnover in January. However, February marked a clear inflection point as total transactions surged 78.9 percent month-on-month to ₦1.54 trillion, alongside a notable resurgence in foreign portfolio inflows. This renewed interest was supported by relative currency stability, with the naira trading within a narrow band of ₦1,380 to ₦1,410 per dollar, while external reserves strengthened to $50.45 billion factors that helped restore investor confidence.
By March, the character of the rally had evolved. What began as a large-cap driven advance broadened into a wider market move. Trading volumes surged to record levels, with average daily transactions ranging between ₦25 billion and ₦30 billion, while total monthly turnover climbed to approximately ₦1.85 trillion, up from ₦0.86 trillion in January. The market was no longer simply rising, it was deepening, with mid-cap and small-cap stocks joining the rally as investors searched for overlooked opportunities.
Sectoral performance reveals the selective strength underpinning the broader surge. The NGX Oil & Gas Index led with a 60.83 percent gain, supported by earnings momentum and reform-driven optimism around companies such as Aradel Holdings and Seplat Energy. The NGX Banking Index followed with a 44.25 percent increase, reflecting intense investor focus on the sector’s ongoing recapitalisation programme. Industrial goods rose 32.10 percent, largely driven by valuation gains in Dangote Cement, while consumer goods and insurance lagged, posting gains of 12.45 percent and 8.90 percent respectively amid FX-related cost pressures and earlier profit-taking.
At the centre of the quarter’s transformation was the banking sector recapitalisation programme, which functioned as both a regulatory mandate and a systemic liquidity event. By the March 31 deadline, the Central Bank of Nigeria confirmed that 33 banks had met the new capital requirements, collectively raising over ₦4.61 trillion through rights issues, public offers and private placements.
Tier-1 institutions dominated the exercise. Zenith Bank raised ₦614 billion, Access Holdings secured ₦602.8 billion, and Fidelity Bank mobilised ₦564.5 billion. Other major players, including Guaranty Trust Holding Company, United Bank for Africa and First Bank Holdings also crossed the ₦500 billion international banking threshold. In contrast, institutions unable to meet the requirements, such as Unity Bank and Union Bank of Nigeria, are now moving toward consolidation through mergers or licence restructuring.
Investor confidence in these recapitalised institutions was evident in their market performance at quarter-end. On March 31, GTCO closed at ₦105.00, Zenith Bank at ₦107.50, Access Holdings at ₦25.90, UBA at ₦48.40, and First Bank Holdings at ₦53.60 levels that underscore strong market conviction in the sector’s long-term prospects.
Crucially, this influx of capital did not remain idle. It circulated within the market, reinforcing demand for banking equities and amplifying the broader rally. Banks, in effect, transitioned from traditional dividend plays into central vehicles for both yield and capital appreciation, particularly in an environment where fixed-income returns were steadily declining.
As the rally broadened, dispersion across individual stocks became more pronounced. High-flying names such as DEAP Capital Management & Trust and SCOA Nigeria delivered outsized gains, reflecting increased speculative participation, while laggards including Red Star Express and Cadbury Nigeria highlighted persistent sector-specific challenges. This divergence suggests the market may be entering a more mature phase, where direction could remain positive but returns become increasingly differentiated.
Valuation metrics reinforce this shift. By the end of March, the market’s price-to-earnings ratio climbed to 18.4x, well above its historical average of 12.5x. This signals a transition from a recovery-driven rally to one characterised by premium pricing, where investors are increasingly paying for forward expectations rather than current earnings. While not necessarily a sign of overvaluation, it raises the bar for future performance, particularly in sectors that have already absorbed significant capital inflows.
Looking ahead, the sustainability of the rally will depend on how effectively newly raised capital, especially within the banking sector is deployed. The risk of return-on-equity dilution is becoming more pronounced as larger balance sheets must now generate proportionately higher earnings to justify current valuations. As the market transitions into the second quarter, investor focus will shift from capital raising to capital efficiency and earnings delivery.
At the same time, potential catalysts remain in view. The anticipated listing of major assets including a possible Dangote Refinery IPO and the long-awaited debut of NNPC Limited could further deepen market liquidity and sustain investor interest, extending the momentum generated in the first quarter.
Taken together, the first quarter of 2026 represents more than a period of strong performance. It marks a structural turning point for Nigeria’s capital market, defined by the convergence of monetary easing, regulatory reform, sectoral strength and renewed investor confidence. What has emerged is not merely a rally, but a full re-rating of the market’s role within both the domestic economy and the global investment landscape.
Ogochukwu Onwaeze is a writer specializing in business and economic journalism. At THEWILL News Media, she translates market trends, financial developments, and policy shifts into clear and engaging stories.
