Blog Details

It is the fifth month of the year, and if you have been following our previous episodes, you would have noticed shifts in asset allocations as macroeconomic conditions continue to evolve.

The month of May presents another opportunity to start or rebalance your portfolio.

While the macro environment changes, some core investment principles remain constant:

These principles apply regardless of your investment goals or risk tolerance.

Investors typically consider multiple asset classes: equities, fixed income, real estate, mutual funds, and alternatives.

However, recent performance suggests that equities have delivered the strongest returns, driven by strong earnings, good valuation, and macro tailwinds.

The Nigerian equities market has posted a remarkable rally in 2026. The All-Share Index (ASI) gained 20.36% in April, pushing year-to-date returns to 55.69%, already surpassing the 51% recorded in 2025.

Market capitalization has risen to about N156 trillion, driven by large-cap stocks such as MTN Nigeria, BUA Cement, Dangote Cement, and Aradel, each adding over N5 trillion so far this year.

Sector performance has been equally strong:

Market activity remains dominated by domestic investors. Total transactions stood at N4.1 trillion as of March, with N3.6 trillion from local investors.

The fixed income market continues to benefit from strong liquidity. The OMO stop rate is around 22%, while Treasury bill yields range between 15% and 17%, broadly in line with inflation at 15.38%.

However, while yields remain compelling, the upside is relatively limited compared to equities.

Market performance in 2026 has been shaped largely by macro factors, particularly the Israel–Iran conflict, which began on February 28.

The resulting rise in crude oil prices has:

Nigerian equities remain one of the most attractive asset classes for investors. As inflation is expected to rise further, equities provide a clear path to inflation-beating returns.

By April, over 70 stocks delivered returns above the 15.38% inflation rate, and more than 60 stocks still exceeded an assumed 25% inflation rate, even without dividends with banking and industrial sectors dominating this category.

That said, we recommend focusing on stocks with strong fundamentals and good liquidity, avoiding those in overbought territory

In January, we recommended investing N1.5 million in banking stocks, specifically in Zenith Bank, Wema Bank, GTCO, UBA, and FirstHoldco. Except for FirstHoldco, the other stocks had gains between 6% to 16%.

Since then, performance has strengthened, with Zenith, GTCO, Access, Stanbic, Wema Bank, and ETI delivering returns above 25%.

In 2025, the sector index posted a negative return of -1.54%, ended January with 13.8% gain and now 128% gain in April.