Banks, client shares drive capital market outlook

Shopper items and banking shares have been highlighted as drivers of alternatives within the Nigerian capital market.

This projection was made by the Head of Equities and Various Options at First Asset Administration, Laura Fisayo-Kolawole, on the Nigeria Financial Outlook 2026, organised lately by FirstBank below the title, ‘The Nice Recalibration: Mastering Resilience in an Period of Asynchronous Development.’

Sunday PidomNigeria stories that as of December 31, 2025, the NGX All-Share Index closed at 155,613.03 factors, in comparison with 102,926.40 factors on the finish of 2024. On a year-to-date foundation, the index returned 51.19 per cent in 2025, in comparison with 37.65 per cent in 2024. Sectoral efficiency indicated that NGX Shopper Items recorded +129.6 per cent, NGX Insurance coverage +65.5 per cent, NGX Industrial Items +58.9 per cent, and NGX Banking +39.8 per cent.

On sectoral alternatives, Fisayo-Kolawole recognized banking, industrial items, and client staples as key areas of focus. “From a sector perspective, we spotlight three sectors particularly: banking, industrial items, and client items, as areas the place buyers ought to be paying shut consideration.

“The banking sector stands to profit instantly from the macroeconomic restoration, with one of many optimistic developments being the robust capital positions throughout banks. This capital ought to ideally be channelled into mortgage progress, which might help web curiosity earnings.

“Many banks additionally exhibit robust returns on fairness and efficient price administration, and we count on earnings momentum within the banking sector to proceed into 2026,” she maintained.

Kolawole described industrial items, notably cement, as one other compelling alternative. “We additionally favour the economic items sector, notably cement producers, as a result of the sector continues to profit from important undersupply, particularly when seen towards Nigeria’s infrastructure deficit.”

She linked sector prospects to broader financial developments. “As buying energy improves alongside the macro restoration, the economic items sector ought to see further advantages.”

On client staples, Fisayo-Kolawole confused resilience in demand. “The patron staples sector provides important items to the financial system, and demand has remained resilient throughout agricultural and broader client names. That is one other space the place we consider earnings momentum will re-emerge, and it’s a house we proceed to encourage investor curiosity.”

Fisayo-Kolawole mentioned international financial situations are more and more supportive of capital flows into frontier markets, positioning Nigeria favourably. “One of many very first factors that was made is that we’re seeing a world by which yields are possible declining, no less than from a broad perspective, and in consequence, capital will more and more look to stream towards frontier markets.

“That is a part of the backdrop by which Nigeria is at the moment positioned, and it’s a backdrop that helps the nation’s relevance as capital searches for yield and worth. There’s a clear macroeconomic restoration happening, and that restoration implies that as capital is on the lookout for a house, a rustic like Nigeria is starting to look more and more enticing as a vacation spot for funding,” she mentioned.

Kolawole highlighted inflation moderation as a essential driver of enhancing sentiment. “Inflation was round 34.9 per cent in December 2024, and the newest studying locations it at about 14.4 per cent. That decline in inflation factors to enhancing buying energy for customers, stronger enterprise confidence, and a way more supportive macro backdrop.”

In response to her, these situations underpin expectations for sustained fairness market restoration. “That is the atmosphere we’re contemplating for the yr forward, and it underpins our expectation that the broad restoration in Nigerian equities will proceed.”

Addressing considerations round latest robust market efficiency, Kolawole acknowledged the size of previous returns however maintained a optimistic outlook.

She mentioned, “It’s comprehensible that some sceptics would say Nigerian equities have already carried out very nicely over the previous three years, and they’d not be unsuitable. Equities rose by roughly 45 per cent in 2023, about 37 per cent in 2024, and roughly 51 per cent final yr. These are very robust nominal returns.

“Regardless of the robust nominal efficiency already recorded, underlying earnings stay very robust, and that may be a key purpose why we stay constructive on equities.”

On valuation, she famous Nigeria’s relative attractiveness in comparison with regional friends. Fisayo-Kolawole asserted, “Once you take a look at Nigeria’s price-to-earnings ratios, Nigerian equities are buying and selling at relative reductions in comparison with African friends. The NGX is buying and selling at round 6.1 occasions, in contrast with about 7.7 occasions for Ghana, round 7 occasions for Kenya, and about 8.7 occasions for Egypt.

“As international buyers seek for alternatives throughout the African continent, Nigeria ought to function prominently as a market providing worth.”

Past equities, Fisayo-Kolawole recognized infrastructure and personal credit score as underappreciated funding areas. “Infrastructure investing and personal credit score stand out as areas which might be underappreciated or misunderstood, but they’re attracting growing investor curiosity, and we count on this pattern to proceed by means of 2025 and into 2026.

“Effectively-structured infrastructure and personal credit score transactions sometimes include robust safety packages, sturdy money stream waterfalls and reserve accounts, which improve money stream visibility and investor safety.”

Fisayo-Kolawole concluded by urging buyers to take a broader portfolio view, saying, “As buyers assess their portfolios throughout fastened earnings and conventional equities, different property resembling infrastructure and actual property shouldn’t be ignored as a part of the outlook for 2026.”