Nigerian Equities Surge 6.95% as ETF Market Correction Wipes Out 50% of Gains
Nigeria's All-Share Index posted its strongest weekly performance in months, gaining 12,676.69 points to close at 194,989.77, even as the exchange-traded fund market experienced a sharp correction with leading ETFs declining 50% amid retail investor losses.
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Nigeria's equity market delivered contrasting fortunes for investors during the week ended 20 February 2026, with the All-Share Index surging 6.95% while the nascent exchange-traded fund segment suffered a dramatic 50% correction that erased speculative gains accumulated over recent weeks.
The Nigerian Exchange All-Share Index closed at 194,989.77 points, representing a weekly gain of 12,676.69 points driven by sustained buying activity in large-capitalization stocks, according to data compiled by Nairametrics. The rally extended the benchmark index's year-to-date advance and reflected renewed investor confidence in fundamentally strong equities amid improving macroeconomic indicators.
Market capitalisation expanded proportionally with the index gains, as institutional and retail investors rotated capital into banking, consumer goods, and industrial sectors. The week's performance marked one of the strongest single-week advances recorded on the Nigerian Exchange in the current fiscal year, signalling robust demand for equity exposure among domestic and international portfolio managers.
ETF Market Faces Sharp Reversal
While traditional equities flourished, Nigeria's ETF market experienced a severe correction as speculative momentum collapsed. STANBICETF30 and VETGRIF30, two prominent exchange-traded funds tracking Nigerian equities, declined approximately 50% during the week, according to Business Day analysis. The correction left retail investors facing double-digit percentage losses as the speculative fever that had driven ETF valuations to unsustainable levels broke decisively.
The ETF segment had attracted significant retail participation in preceding weeks, with trading volumes surging as investors sought leveraged exposure to equity market movements. However, the disconnect between ETF pricing and underlying net asset values created conditions for a sharp reversal once momentum shifted. Market observers noted that the correction represents a healthy adjustment following excessive speculation, though the speed and magnitude of declines caught many participants unprepared.
The divergence between ETF performance and the broader equity market underscores the risks associated with momentum-driven trading strategies in relatively illiquid segments. While the All-Share Index components benefited from fundamental buying, ETF holders experienced amplified losses as redemption pressure and reduced liquidity exacerbated price declines.
Currency Appreciation Supports Market Sentiment
Parallel to equity market developments, the naira sustained appreciation across foreign exchange market segments during the week, adding to positive investor sentiment. According to Business Day reporting, the Nigerian currency strengthened against the US dollar, resulting in mark-to-market losses for holders of dollar-denominated assets while supporting import-dependent sectors and reducing inflationary pressures.
The naira's appreciation reflects improved dollar liquidity conditions and potential policy interventions by the Central Bank of Nigeria aimed at stabilising the exchange rate. Currency stability has emerged as a critical factor influencing equity valuations, particularly for companies with significant foreign currency exposure or import dependencies. The strengthening naira reduces translation risks for multinational corporations operating in Nigeria and enhances the attractiveness of naira-denominated assets to foreign portfolio investors.
Banking sector equities, which featured prominently among the week's gainers, benefited from reduced foreign exchange revaluation losses on dollar liabilities. Consumer goods manufacturers similarly gained as lower import costs improved margin outlooks, contributing to the broad-based rally in large-cap stocks that drove the All-Share Index advance.
Market Outlook and Risk Factors
The week's developments highlight the maturation of Nigeria's capital markets alongside persistent structural challenges. The 6.95% surge in the All-Share Index demonstrates the market's capacity for strong performance when fundamental conditions align, while the ETF correction serves as a cautionary reminder of liquidity constraints and speculation risks in newer market segments.
Looking ahead, equity market performance will likely depend on sustained naira stability, corporate earnings trajectories, and broader macroeconomic policy consistency. The Central Bank of Nigeria's monetary policy stance, fiscal developments, and oil price movements remain key variables influencing investor sentiment and capital flows.
For ETF investors, the 50% correction may present entry opportunities once valuations align more closely with underlying asset values, though market participants will likely approach the segment with greater caution following recent volatility. The Nigerian Exchange's regulatory framework for ETFs may require refinement to address liquidity concerns and prevent excessive speculation that disconnects fund pricing from net asset values.
The naira's appreciation trajectory faces tests from potential external shocks, including global commodity price fluctuations and changes in foreign portfolio investment flows. Sustained currency stability will require continued improvement in Nigeria's external reserves position and effective management of foreign exchange demand pressures across commercial and retail segments.