By Peter Egwuatu

Nigeria’s strong stock market performance is not merely a product of naira depreciation or “balance-sheet wealth”, but reflects genuine gains that have also survived conversion into United States dollars, capital markets analyst and commentator on financial regulation, Dave Adekunle, has said.

Adekunle, in an analysis titled “Mirage or Measurement? Putting Nigeria’s Stock Market to the Dollar Test,” argued that the Nigerian Exchange (NGX) rally should be tested against dollar returns rather than dismissed as an optical illusion created by the naira’s depreciation.

He was reacting to an essay titled “Tinubu’s Fake Economic Theory and The Stock Market: Why His Booming Economic Claim Is Delusion of Grandeur,” which argued that the stock market’s rise was largely a result of currency depreciation.
According to Adekunle, the argument that the market rally is simply “devaluation arithmetic” is testable.
“Taking it seriously means testing it. Because the argument has a property that most of our public commentary conspicuously lacks: it is falsifiable. If the rally is currency arithmetic, then strip out the currency and the gains should disappear,” he said.
He noted that the test had effectively been carried out through dollar-denominated comparisons of global equity markets.
NGX ranked among world’s best performers
Adekunle said that on July 10, 2026, the NGX All-Share Index became the best-performing equity index in the world in dollar terms, with a year-to-date return of about 67 per cent, displacing South Korea’s KOSPI.
He added that by August 14, following a strong rebound in the Korean market, the NGX ranked third among 92 markets, returning 65.23 per cent in dollar terms, behind the KOSPI at 68.52 per cent and Ghana’s GSE Composite at 66.68 per cent.
“A dollar return is a post-translation figure. It is what survives after the exchange rate has finished with you. Depreciation does not flatter a dollar return — it destroys one,” Adekunle said.
He argued that this was particularly significant because Nigerian equities had previously been criticised for delivering strong local-currency returns that disappeared when converted into dollars.
“I made that criticism myself, at the time. It was correct at the time. It is now describing a market that no longer exists,” he stated.
According to him, the naira appreciated roughly four per cent against the dollar in 2026, following an appreciation of about 5.9 per cent in 2025, supported by improved foreign exchange liquidity, higher reserves and a narrower parallel-market spread.
“Currency movement is now adding to international returns rather than eating them,” he said.
He therefore asked: “If this is devaluation arithmetic, where is the devaluation?”
Domestic investors dominate
Adekunle also dismissed the argument that the rally was primarily driven by foreign portfolio investors or “hot money”.
He said domestic investors accounted for approximately 89 per cent of participation and transaction value on the NGX in the first half of 2026, while foreign investors accounted for about 11 per cent.
“Whatever else it is, it is not a carry trade,” he said.
He further pointed to the entry of about 500,000 new investors through bank public offers and rights issues between 2024 and 2026.
According to him, the increase in retail participation challenges the argument that the Nigerian stock market is essentially a closed circle of asset managers and connected individuals.
“Half a million new retail accounts is the beginning of an answer to that worry, not evidence for it,” he said.
₦4.65trn fresh capital mobilised
Adekunle also argued that focusing solely on the secondary market misses a significant part of what the capital market has achieved.
“The most consequential omission is one of framing. The mirage thesis examines the trading screen — the secondary market — and quietly assumes it is the whole market. It is the smaller half,” he said.
According to him, the Nigerian capital market mobilised ₦4.65 trillion in fresh equity over 24 months, enabling 33 deposit money banks to comply with the Central Bank of Nigeria’s new capital requirements.
“That is not money circulating between speculators. It is new, permanent, loss-absorbing capital sitting on the balance sheets of the institutions that finance the economy,” he said.
Adekunle argued that better-capitalised banks would have higher single-obligor limits, allowing them to provide larger financing for manufacturing, agro-processing, infrastructure and power.
“A bank cannot lend what it does not have. The recapitalisation was, in substance, a recapitalisation of Nigerian credit supply — the very thing the essay says is missing,” he stated.
He also cited the movement in the banking index as evidence of price discovery, noting that the sector declined in mid-2024 as investors anticipated dilution from rights issues before recovering as banks raised capital and investors reassessed their stronger balance sheets.
“Decline on anticipated dilution, recovery on realised capital. That is textbook price discovery, and it is not what a rigged market does. A racket does not price dilution against itself,” he said.
Foreign capital also rising
Adekunle said foreign capital flows into the banking sector had also increased, with inflows rising 93.25 per cent year-on-year to $13.53 billion in 2025.
He said the figure represented 58.26 per cent of Nigeria’s total foreign capital importation of $23.22 billion, adding that international investors supplied more than a quarter of recapitalisation capital.
He noted that equity invested in a bank’s capital base could not simply be withdrawn at short notice.
“It can only be sold to somebody else, who changes the name on the register without removing a naira from the bank,” he said.
Adekunle also cited regulatory and market infrastructure developments, including the Investments and Securities Act 2025, the planned transition to T+1 settlement and increased interest from international index providers and fund managers.
However, he acknowledged concerns surrounding Nigeria’s accessibility to foreign investors.
“Intellectual honesty requires the other entry in the ledger: FTSE Russell remains conspicuously cautious on Nigeria’s reclassification, citing repatriation reliability and market accessibility. That is a live constraint, not a footnote, and anyone selling this story without mentioning it is selling something,” he said.
Critics have valid concerns
Despite defending the stock market rally, Adekunle said critics were right to argue that market performance alone does not translate automatically into improved living standards.
“They are right that the All-Share Index feeds nobody. Right that market capitalisation is not welfare. Right that a share price can triple without a single hire,” he said.
He also agreed that Nigeria still needed significantly more greenfield investment, improved power supply, better logistics and cheaper credit for small businesses.
According to him, the market is also heavily concentrated in financial services, while deeper participation from manufacturing and technology companies would strengthen the market.
“And right, above all, that Nigerians experience this economy through rice, transport fare and rent — and that no index level has ever softened any of the three,” he said.
Adekunle, however, argued that some of the figures used to support the “mirage” argument had become outdated following recent economic data revisions.
“The essay’s own method — check the claim against the number — is exactly the right one. It simply has to be applied to every claim, including the comfortable ones,” he said.
‘Stock market is a barometer, not weather’
Adekunle concluded that the stock market should be viewed as a measure of economic and financial activity rather than as a direct measure of citizens’ welfare.
“The stock market is a barometer, not the weather,” he said.
He argued that the ₦4.65 trillion raised in permanent equity capital for 33 banks could not simply be dismissed as an asset-price illusion.
“A balloon does not raise ₦4.65 trillion in permanent equity for 33 banks. A balloon does not survive conversion into dollars. And a balloon is not owned, to the tune of 89 per cent, by the people standing underneath it,” he said.
He stressed, however, that the stock market alone could not solve Nigeria’s broader economic challenges.
“The hard work is untouched by any of this: power, roads, credit at rational rates, jobs that pay enough to live on. No capital market anywhere has ever delivered those by itself, and ours will not be the first,” he said.
“But a market that is mobilising trillions in domestic savings, and that global allocators now rank among the strongest performers in the world, is not the obstacle to that work.
“It is one of the few instruments we have that is currently doing its job” he noted.