Fixed Income Instruments

Dear Esteemed Client,

We are pleased to inform you of our Economic Outlook and Recommendations for the year 2026.
Below is our Executive Summary

Consolidation of reforms; New opportunities, New Dividends

Our outlook for 2026 presents great investment opportunities, emerging from continued macroeconomic stabilization and structural reforms in both global and domestic financial markets. We reviewed the year 2025 and all developments locally and globally, analyzing economic policies, geopolitical events, and identifying emerging opportunities for the year ahead. We evaluate key economic factors influencing growth including trade tensions, monetary policy normalization, and inflation moderation, while outlining future opportunities and trends.

Globally, economic growth is projected to moderate slightly in 2026, with GDP forecast at 3.1%, compared to 3.2% in 2025. This deceleration reflects the fading of temporary boosts from front-loaded trade and initial fiscal expansions, as structural headwinds including aging populations, weak productivity growth, and geoeconomic fragmentation continue to constrain medium-term prospects. Advanced economies are expected to grow by 1.6%, with the United States maintaining resilience at 2.1%, supported by robust AI investment despite the lingering effects of 2025 tariff policies. Conversely, growth in emerging markets and developing economies is projected to be 4.0%, with China slowing further to 4.2% as its property sector pressures persist, India will continue as a standout performer with 6.2% growth driven by strong domestic demand.

The year ahead presents significant global developments requiring careful navigation. The oil market faces a substantial projected supply surplus of approximately 3.84 million barrels per day, with Brent crude prices projected to average around $55 per barrel, driven by relentless non-OPEC+ production growth and tepid demand. Geopolitical tensions remain elevated, with ongoing conflicts in Eastern Europe and the Middle East continuing to reshape global trade and energy markets. Trade policy uncertainty persists as a primary risk, with the potential for continued protectionist measures threatening to disrupt supply chains and keep inflation elevated.

Looking forward to 2026, Central banks across major economies are expected to continue cautious monetary easing inflation continues to ease.

In Nigeria, the economy demonstrated remarkable progress in 2025, with headline inflation declining from 24.48% in January to 14.45% in November the lowest level since October 2020. This moderation was achieved through a combination of CPI rebasing, improved agricultural output, and effective monetary policy coordination. Real GDP growth strengthened progressively through 2025, recording 3.13% in Q1, 4.23% in Q2, and 3.98% in Q3, driven predominantly by the services sector which contributed over 53% to aggregate GDP. External reserves strengthened considerably, rising to $42.32 billion in September.

The Central Bank of Nigeria implemented a moderate monetary policy shift in 2025, signaling an accommodative pivot with a 50 basis point cut to 27.00% in September. In the financial markets, the Nigerian equities market delivered exceptional performance in 2025, with the NGX All-Share Index achieving a year-to-date return of 51.19% by December 31st. This rally was driven by strong corporate earnings, improved macroeconomic stability, and growing investor confidence, with foreign portfolio participation more than doubling from N0.78 trillion in the prior year to N2.18 trillion.

The positive outlook for 2026 is strengthened by expectations of continued inflation moderation and potential further monetary policy easing, with the MPR likely to be trending lower from 27%. We expect the Nigerian equity market to expand significantly, supported by public offer, right issue listing by company that did that last year, and possibilities of Dangote Refinery and NNPC listing on the exchange. This environment will create significant investment opportunities in well-capitalized banks, insurance companies, and industrial goods sectors. Further, structural reforms such as the Nigeria Tax Act 2025 and the ambitious ₦58.18 trillion “Budget of Consolidation, Renewed Resilience and Shared Prosperity” will be crucial in driving economic recovery and stability Our optimal portfolio for the year 2026 include equities, bonds and ETFs as shown below.

click this link to read our 2026 economic outlook for investment opportunities.