Yemisi Izuora
Stock market expert, has projected that Nigeria’s stock market could still have room to climb in the second half of the year despite a blistering first-half rally.
According to CardinalStone Securities, a mix of earnings momentum, sector-specific tailwinds and the potential listing of Dangote Refinery could help sustain investor appetite.
Speaking in a television interview with CNBC, Abdulahi Rufai, senior analyst at CardinalStone Securities, said the firm remains constructive on the outlook for Nigerian equities even after the market returned more than 50 per cent in the first half and at one point surged as much as 60 per cent before retreating in recent months.
The strong start to the year was driven by a combination of catalysts, Rufai said, including Nigeria’s continued frontier-market classification by FTSE Russell, a rebound in sentiment after investors moved past concerns around capital gains tax, and support from solid corporate earnings and dividend payments.
“The markets began the year on a very strong note,” Rufai said, noting that returns in the first three to four months approached 60 per cent before some retracement set in. He attributed the pullback over the last two months largely to profit-taking after the sharp run-up.
Even so, CardinalStone argues that the broader setup for the remainder of the year is still favorable.
A major potential catalyst, according to Rufai, is the anticipated listing of Dangote Refinery, which he described as a transaction that could become one of Africa’s largest initial public offerings. If the refinery is listed on the exchange, it could materially influence market sentiment and index performance given its likely scale and weight.
Rufai said such a listing could trigger repricing dynamics often seen with high-profile IPOs and provide a meaningful boost to the benchmark index before year-end. For investors, the implication is that market upside may not be exhausted, particularly if a marquee listing helps draw fresh capital and renews enthusiasm around Nigerian assets.
Another near-term driver is the upcoming earnings season. First-half and second-quarter results are expected in the third quarter, and CardinalStone sees the potential for those releases to reignite investor interest, especially in sectors where recent macro conditions have been supportive.
Rufai highlighted upstream oil and gas as one of the clearest beneficiaries. He said second-quarter results should reflect a longer period of elevated oil prices than was captured in first-quarter numbers, potentially translating into stronger earnings for listed producers.
According to him, first-quarter 2026 earnings only reflected about a month of higher oil prices, while the second quarter should show the impact of roughly two months of elevated pricing. That could lead to better reported numbers, particularly for exploration and production names that are more directly exposed to crude-price movements.
Still, he also cautioned that the strength may moderate later in the year. Since a ceasefire announcement helped cool crude prices, oil has retraced from earlier highs, suggesting that realized pricing in the second half may not be as supportive as it was during the first half.
That means oil and gas shares may continue to benefit from strong near-term earnings and sentiment, but investors should be careful not to assume that first-half pricing conditions will persist unchanged through year-end.
On whether investors should tactically rotate into oil and gas and away from other sectors, Rufai stopped short of calling for a broad reallocation. Instead, he suggested a more selective approach, arguing that several non-energy sectors still retain structural advantages that could help them navigate cost pressures and deliver respectable results.
He pointed to cement, fast-moving consumer goods and telecoms as areas where companies may face margin pressure from higher energy costs and softer demand conditions. Even so, CardinalStone does not expect those pressures to overwhelm the underlying strengths of major listed companies.
In cement, Rufai said local producers continue to benefit from Nigeria’s domestic self-sufficiency, while some companies have already taken steps to cushion the impact of rising energy costs by adopting alternative fuel systems and compressed natural gas logistics. Those operational adjustments, combined with the strategic importance of the sector, should help support profitability even if margins come under some pressure.
For consumer goods and telecom operators, the picture may be more mixed, with energy inflation weighing on costs and households potentially becoming more price-sensitive. But CardinalStone’s view is that the structural positioning of leading companies in those sectors should still provide enough resilience for them to post decent earnings in the second half.
Rufai also noted that some oil and gas names have company-specific growth drivers beyond commodity prices. He cited Seplat as an example, pointing to what he described as a strong production volume story and expectations for solid operating profit even under pricing assumptions below current market levels. That, he said, suggests parts of the sector remain fundamentally attractive even if crude prices ease further.
Taken together, the message from CardinalStone is that the Nigerian equity market’s remarkable first-half performance does not necessarily mark the end of the rally. While volatility, profit-taking and sector divergences are likely to persist, catalysts in the form of earnings, marquee listings and stock-specific fundamentals could continue to support valuations.
For investors, the second half may therefore be less about chasing the broad market higher and more about identifying where earnings momentum and structural resilience overlap. Oil and gas may offer a near-term boost, but cement, telecoms and consumer names are not being written off. Instead, the firm’s outlook suggests a market that is becoming more selective, but not yet exhausted.
With first-half gains already substantial, the next phase of the rally may depend on whether expected catalysts arrive on schedule and whether companies can continue to defend margins in a still-challenging operating environment. For now, CardinalStone’s stance remains clear: the outlook for Nigerian equities in the second half is still constructive.