July 29,2026/InvestmentOne Report
Please find HERE, our “H2:2026 Strategy Report”.
EXECUTIVE SUMMARY
H1:2026 was shaped less by steady policy credibility than by a genuine shock: the escalation between the US and Iran in late February, and the resulting disruption to the Strait of Hormuz, sent Brent from USD61pb to a peak above USD125pb before a June truce pulled it back toward USD85pb. That single event ran through everything else in this report, from global inflation and rate paths to Nigeria’s trade balance and fiscal numbers.
Nigeria enters H2:2026 on firmer footing than the headline growth figure implies. Real GDP rose 3.89% YoY in Q1:2026, driven by services, ICT and refining-linked manufacturing, while electricity remained the clear drag, contracting 15.30% YoY. We expect growth to settle around 4.00% for H2, supported by better FX liquidity and continued Dangote Refinery ramp-up, but capped by weak power supply, tight financing conditions and elevated inflation, albeit lower than current levels – we expect inflation figures to close the year around 14.80% – 15.80%.
The external position was the standout story. Reserves crossed USD51.00bn by June, a 13-year high, and the Naira appreciated 4.06% to close H1 at NGN1,379.68/USD, helped by FPI inflows and a shrinking parallel-market premium. We expect the Naira to hold within NGN1,310 – NGN1,410/USD through H2, with risk skewed toward episodic pressure rather than a systemic upside.
Fiscally, the picture is more strained. The record NGN68.32trn 2026 budget carries a NGN31.45trn deficit, roughly 6.4% of GDP, and by June the government had raised only about 36% of its domestic borrowing plan. With elections approaching in 2027, capital spending is likely to rise regardless of the revenue shortfall.
The NGX All-Share Index returned 47.43% in H1, led by Oil & Gas and Industrial Goods; we see a further 10–20% advance in H2, though gains should be more narrowly led and earnings-dependent, with the FTSE reclassification decision and the Dangote Refinery listing as key catalysts. Fixed income yields rose through H1 on inflation and heavy DMO borrowing, but we expect a bullish H2 as inflation eases, with average T-Bills and bond yields settling near 17.00% and 16.00% respectively.
Please find HERE, our “H2:2026 Strategy Report”.