Mirage or measurement? Putting Nigeria’s stock market to the dollar test

The debate surrounding Nigeria's stock market has reached a pivotal point. An essay titled "Tinubu's Fake Economic Theory and The Stock Market: Why His Booming Economic Claim Is Delusion of Grandeur" argues that the country's stock market rally is merely an optical illusion. Proponents of this theory claim that devaluating the naira by 200% would make dollar-linked assets appear three times more valuable in local currency, creating a false sense of wealth without any corresponding increase in real wealth or employment opportunities.

However, the essay itself acknowledges the validity of this argument, emphasizing that it is a falsifiable claim that deserves serious consideration.

To test this hypothesis, one must examine the market's performance when stripped of currency fluctuations. Bloomberg's Bloomberg Terminal tracks the performance of 92 global equity indices, all measured in U.S. dollars. According to this data, Nigeria's All-Share Index became the world's top-performing equity index in dollar terms on July 10, 2026, with a 67% year-to-date return.

However, by August 14, after a brief rebound, Nigeria had dropped to the third position, behind South Korea and Ghana. This phenomenon demonstrates the importance of considering the post-translation dollar return, which is not affected by currency devaluation. The essay itself initially made this same criticism, correctly identifying the issue, but the market situation has since altered.

While the essay acknowledges the foreign portfolio money flowing into Nigeria's stock market, it also challenges the notion that this influx is solely speculative. In the first half of 2026, domestic investors accounted for 89% of participation and transaction value on the Nigerian Exchange. Over 24 months, the capital market mobilized N4.65 trillion in fresh equity, bringing 33 deposit money banks into compliance with the Central Bank's new thresholds.

This capital provided a substantial base for lending to crucial sectors like manufacturing, agro-processing, infrastructure, and power. The recapitalization of Nigerian banks led to a recovery in their performance as capital was raised and stronger balance sheets were assessed. Furthermore, international investors contributed 58.26% of the total foreign capital to Nigeria's economy in 2025, underscoring the genuine involvement of foreign capital in the country's economic growth.